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THE CASE OF 
COSTA RICA 



LINCOLN G. VALENTINE 



•> Trar»r»- 
JUL 3 1927 






^7- /'7,--,^./, 



INDEX. 

WHICH? 

(The Case of Costa Rica.) 

Page. 

Is this continent ripe for a policy of pure idealism ? 7 

Europe versus America 'in competing for strategic oil grant. 

Monroe Doctrine held to be inapplicable by Gonzalez ' Government of Costa 

Rica and European nations 11 

How the Kaiser succeeded in bossing Costa Rica 1: 

President Gonzalez' scrap of paper theory 23 

Alfredo Gonzalez; ousted, enlists President Wilson's aid. 

How Gonzalez touched our President's sentimental chord and obtained his 

support 6. 

Gonzalez' attempts to influence American Senate an^public 

. *" ^ * ^ f"* '' * ^ J, ^ ** 
His publicity campaign against United 'States interests. Their safes rifled 

" with the aid of United States Governftient 'officials? " 79 

President Tinoco's testimony. 

Costa Rican Congress unanimously rejects Gonzalez' charges as baseless and 

untrue 93 

The American Senate and the case of Costa Rica 97 

Conclusion. 

A more practical Latin American policy is needed, protecting our citizens and, 

at the same time, aiding our continental neighbors 103 

Appendix 1. Address of Representative Norman J. Gould in the House of Repre- 
sentatives 105 

Appendix 2. From the testimony of the Assistant Editor of "El Imparcial " 109 



August, 1919. 



PREFACE : 



The writer of this booklet has no personal interest in Costa Rican 
affairs and does not champion anybody's cause. No profit, direct or in- 
direct, will accrue to him from the estabHshment of one regime or another. 
He seeks no concession or privilege in that little country. 

This expose is published, not as his defence against charges that are 
baseless on their face; not as an incrimination of the aliens and Ameri- 
cans pictured therein, who, after all, were merely striving to attain their 
own ends in their own way; but as an object lesson to illustrate what 
seems to be one of the many serious mistakes in our Latin American policies 
of recent years. He deems himself prepared to write on the subject 
because of his long and intimate acquaintance with facts and persons. No- 
body appears to have taken the initiative in presenting this melodramatic 
tangle before the public. Someone should. The harm has unfortunately 
been done, but perhaps it is still time to reflect and remedy. 

LINCOLN G. VALENTINE. 

2200 Q St., Washington. 

u ■■. 



IS THIS CONTINENT RIPE FOR A POLICY OF PURE IDEALISM ? 

Some of our great statesmen have devoted long and conscientious 
thought to Pan-American problems and now view with much concern our 
fatal mistakes of recent years. Their conclusions and policies may perhaps 
be condensed into the following cardinal principles : 

Attract Latin Americans toward us — 

Sentimentally: by abstaining from meddling with their internal 
affairs unless provoked; letting each country evolve its own destiny 
in its own way; avoiding the feehng that we desire to "force" them, 
but instilling the impression that we are wilHng to co-operate. 

Politically: by preventing as far as possible European and 
Asiatic strongholds in Latin America; taking steps to retain all 
important strategic rights on this continent in American hands and 
granting the full protection of the Stars and Stripes to our citizens 
wherever they may be. 

Financially and commercially: by giving our sisters to the south 
large borrowing facilities in the United States and meeting their 
commercial needs on the same basis as European and Asiatic compe- 
titors. 

These principles, wisely applied by Secretaries of State Root and Knox, 
did more to create closer Pan-American relations than anything prior to 
1912. This is best illustrated in the case of Central America which had been, 
the hotbed of revolutions prior to 1907 when, through the intelligent col- 
laboration of our Secretary of State Root and the Mexican Secretary of 
State Creel, the Central American Peace Court was established, which for 
years prevented wars and revolutions in Central America. 

President Wilson, however, had different ideas. He appeared to be 
of the opinion that elevated idealism and international altruism alone, ex- 
pressed with touching rhetoric, would rapidly reach the hearts of Latin 
Americans and establish ties of feeling stronger than ties of common inter- 
est. The purpose of this booklet is not to go into a long dissertation on 
the Wilson doctrine and its effects. We have heard much complaint in 
recent years on the part of thinking Americans, far-seeing enough to com- 
prehend the danger of this new policy. In Mexico, Americans have been 
killed by the score and hundreds of millions of American dollars invested 
have become endangered. Unrest has broken out anew in Central America 
and the Central American Peace Court (the first real experiment in a League 
of Nations), has been permitted to go out of existence. It has been charged 



that the nefarious influence of the Hun was responsible for this ungratifying 
result. No doubt it was. But it is reasonably certain that this same influence 
would have been reduced to almost nothing, prior to 1914, had the Latin 
American policy of preceding administrations prevailed. 

Nothing illustrates this so well as the case about to be related. The 
expose will be limited to a compilation of established facts and original 
documents, which reveal the curious psychology of some of our little neigh- 
bors; the feeling on their part towards the United States on the one hand, 
and Germany and Great Britain on the other. It is a graphic illustration 
of the intricate problems confronting, under the Wilson policy, Ameri- 
can capitalists desirous of developing large financial and industrial propo- 
sitions in the smaller countries south of us. 

When a European of standing, whether English, French or German, 
ventures out of his country on legitimate commercial, financial or industrial 
pursuit, his government is behind him. Upon arriving at a Latin American 
capital, he is courteously attended to by his Embassy or Legation and, in 
dealing with the local Government, enjoys the official introductions and 
direct assistance of his country's Envoy. If in the course of the negotiations, 
or as an outcome thereof, the contracting Government tries to drive an unfair 
bargain, unduly interferes with the execution of the covenant or otherwise 
improperly obstructs the deal, the Embassy or Legation as a rule uses its 
good offices in his behalf. European Powers realize two things : 

1. Exceptional financial risks are attached to investments in 
foreign states, especially in the smaller Latin American republics. 
These risks can only be offset by securing additional advantages ; 
otherwise there would be no inducement for foreign investors to ven- 
ture out of their own country. 

2. The more ample the scope and drastic the terms obtained, 
'" the greater the commercial and political benefit accruing to the 

investor's country. 

This does not, of course, mean extortion or usury, but the securing 
of terms commensurate with the risks attached to the venture and the size 
of the investment. 

Here again President Wilson seems to hold a different view on the 
subject. His speeches and actions appear to reveal a firm conviction 
that a large measure of altruism should predominate among American capi- 
talists venturing outside of the United States. They should abstain from 
seeking special privileges in foreign lands and be content with securing 
such terms as are current in our country for similar enterprises. The in- 
creased riks should not be compensated by more favorable conditions and 
guarantees, but rather by creating idealistic ties of sentimental understand- 
ing which he takes to be stronger than ties of material interest. 



This interpretation of his ideas is especially justified by his attitude 
in Mexican and Central American affairs. It is also clearly set forth in 
his Mobile speech of October 26, 1913, wherein he said among other things : 

" The future, ladies and gentlemen, is going to be very different 
in this hemisphere from the past. These States, lying to the south 
of us, which have always been our neighbors, will now be drawn 
closer to us by innumerable ties and I hope, chief of all, by the tie 
of common understanding of each other. Interest does not tie 
nations together. It sometimes separates them * * * " 

" There is one peculiarity about the history of the Latin Ameri- 
can states which I am sure they are keenly aware of. You hear 
of ' concession ' to foreign capitalists in Latin America. You do not 
hear of concession to foreign capitalists in the United States. They 
are not granted concessions./ They are invited to make investments. 
The work is ours, though they are welcome to invest in it. We do 
not ask them to supply the capital and do the work. It is an invita- 
tion, not a privilege ; and states that are obliged, because their terri- 
tory does not lie within the main field of modern enterprise and 
action, to grant concessions, are in this condition, that foreign inter- 
ests are apt to dominate their domestic affairs; a condition of affairs 
always dangerous and apt to become intolerable. What these states 
are going to see, therefore, is an emancipation from the subordi- 
nation which has been inevitable, to foreign enterprise and an asser- 
tion of the splendid character which, in spite of these difficulties, 
they have, again and again, been able to demonstrate. 

" The dignity, the courage, the self-possession, the self-respect 
of the Latin American States, their achievements in the face of all 
these adverse circumstances, deserve nothing but the admiration and 
applause of the world. They have had harder bargains driven with 
them in the matter of loans than any other peoples in the world. 
Interest has been exacted of them that was not exacted of anybody 
else, because the risk was said to be greater ; and then securities 
were taken that destroyed the risk, an admirable arrangement for 
those who were forcing the terms. I rejoice in nothing so much 
as in the prospect that they will now be emancipated from these con- 
ditions, and we ought to be the first to take part in assisting in 
that emancipation." 

The President's cis-Atlantic policy, since expressed and applied on 
many occasions, may therefore be summarized in the following principles, 
based upon his speeches and attitude in most Latin American matters : 

1. Abandon the Root and Knox policies. 

2. Withdraw the protection of the Stars and Stripes from 



10 

every United States citizen who establishes enterprises in Latin 
America upon terms and conditions markedly more liberal than those 
prevailing in the United States. 

3. Oppose nothing but perfunctory resistance to Latin Amer- 
ican governments obstructing the development of such American con- 
cessions as contain privileges notably greater than those customary in 
the United States, regardless of the " material interests " involved. 

This policy relegates to the class of " concession hunters," unworthy of 
strong government support, our largest enterprises in Latin America, such 
as : petroleum companies in Mexico operating under special concessions ; 
certain fruit and steamship companies ; banks having dealings with Spanish 
American governments under specific, apparently liberal, grants, etc. Roose- 
velt, under this classification, might have been called the greatest " con- 
cession hunter " because he secured the most liberal terms of all, viz. : 
the Panama Canal, which placed into our hands the fate of the Panama 
Republic. And — lest we forget — President Wilson has himself qualified 
as a " concession hunter " because the grant he obtained from Nicaragua 
for the construction of an inter-oceanic canal through that country com- 
prises terms almost as broad and exclusive as those embodied in the Panama 
treaty. 

The facts now to be made public for the first time, though seemingly 
extraordinary, are quite likely to be similar to others that have never be- 
come known. They are of educational value to anyone interested in our 
financial, industrial and commercial expansion on this continent. Whilst 
this expose pictures a rather distressing condition of affairs, it is not written 
for the purpose of discouraging Americans from venturing into the southern 
countries. Quite the reverse, its object is to encourage, by the frank pres- 
entation of a case in point, the formation of a Latin American policy, prac- 
tical, constructive and acceptable in spirit by our continental neighbors, 
without the confusing cloak of an idealism, highly admirable, but inapplicable 
in this era of cold and competitive progress. 



11 



EUROPE VERSUS AMERICA IN COMPETING FOR STRATEGIC 

OIL GRANT. 

Monroe Doctrine Held to be Inapplicable by Gonzalez Government 
OF Costa Rica and European Nations. 

The problem play before us took place in the Republic of Costa Rica, , 
Central America, and the account begins in the year 1912. Petroleum, the/ 
liquid gold coveted by every nation and which has so much to do with our 
troubles in Mexico, is at the bottom of it. 

A look at the map shows the strategic importance of oil fields in 
Costa Rica. It will be seen that this little state lies between the Panama 
Canal domain and the proposed Nicaragua inter-oceanic waterway. Petro- 
leum rapidly taking the place of coal as fuel, the product of those fields, 
within pumping distance of the two canals, is therefore of the utmost 
strategical importance. It may safely be said that the nation possessing the 
oil output of Costa Rica and Panama will, when large production is secured, 
control the shipping situation in Latin America. Another feature should 
Jpe noted as interesting : 

A vast oil supply base on the narrow accessible strip of Central 
America will go far towards offsetting the dominating international value 
of the Mexican oil fields, which Carranza is trying so hard to wrest from 
the hands of the United States and Great Britain. 

With the foregoing facts pointed out, the reader will not be surprised 
to learn that European nations, particularly Great Britain and Germany, 
have made every effort to obtain the control of the Costa Rican petroleum 
deposits. The question arises: Could they, under the Monroe Doctrine, 
be permitted to acquire them ? Our story revolves around that issue. Most 
of the Latin American nations deny that the Monroe Doctrine gives the 
United States the right to prevent them from granting whatever they 
choose to European or Asiatic states. Our government, however, has 
always held that, under the Monroe Doctrine, none but American countries 
are entitled to the control of strategic rights in this hemisphere. 

European attempts to secure the Costa Rican oil base are related in 
the following letter from the writer to the Hon. Stewart Johnson, American 
Charge d' Affaires in Costa Rica : 

"....(b) Control of Fuel Resources. 

" Six or seven years ago, the First Lord of the Admiralty as- 
serted in a speech that ' the control of the fuel resources in the 
countries around the Caribbean Sea means the control of the Carib- 



12 

bean Sea,' or words to that effect. He further stated that, there- 
fore, it was to the interest of the British Government to gain the 
greatest control possible of oil and coal lands in Mexico, Central 
America, and the northern countries of South America, especially in 
sections from which oil could be pumped to the Panama Canal. 

" British Attempts to Secure Caribbean Oil Control, 

"As is generally known, the firm of S. Pearson & Son has the 
direct backing and, in fact, collaborates with the British Admiralty. 

" For the purpose of carrying out the plans above outlined. 
Lord Murray, a partner of S. Pearson & Son, of London, visited 
Colombia, Panama and Costa Rica, in 1913, in order to secure con- 
cessions covering the control of the oil resources south and north 
of the Panama Canal for his firm. 

"(a) Colombia. 

" Preparatory to their endeavors, S. Pearson and Son estab- 
lished close relations with Mr. Saturnino Restrepo, a member of 
one of the most influential families of Colombia and who, I believe, 
at that time represented Colombia in England in a diplomatic or con- 
sular capacity. 

" Owing to the influence of Mr. Restrepo, Lord Murray was 
placed in touch with some of the leading elements of Colombia. 

" Through friends of Mr. Restrepo's I have since been informed 
that S. Pearson and Son were advised not to attempt to secure con- 
cessions in Colombia for any large foreign firm directly, in view of 
the strong anti-foreign sentiments which for years have reigned 
in Colombia. It was considered more feasible to have some influ- 
ential Colombian without any ostensible connection with large British 
interests, such as Mr. Restrepo himself obtain the concession. 

" S. Pearson and Son, however, in the belief that the prestige of 
its name and that of its representative. Lord Murray, would open the 
door of Colombian good-will, disagreed with Mr. Restrepo. 

" That I understand, was one of the main reasons why Lord 
Murray was entirely unsuccessful in Colombia. 

"(b) Panama. 

" Lord Murray was equally unsuccessful in Panama because, 
I understand, the United States Government, for strategic and 
political reasons, did not look with favor upon British control of the 
oil resources of that country. 

"(c) Costa Rica. 

" S. Pearson and Son established its relations with the Gov- 
ernment of Costa Rica through Mr. Wencislao de la Guardia, at 



13 

that time Costa Rican Minister to Great Britain, resident in London. 

" Mr. Restrepo had accompanied Lord Murray to Colombia. 
In a like manner, Mr. de la Guardia proceeded to Costa Rica, to 
back the endeavors of the Pearson concern. 

" It is worthy of note that Mr. Wencislao de la Guardia is a 
brother-in-law of Mr. Federico Tinoco, having married the latter's 
sister. 

" On September 27, 1913, the Costa Rican Government signed 
a contract with S. Pearson and Son, granting to the said firm the 
control of all petroleum resources in Costa Rica for sixty years, 
renewable for another sixty years at the contractor's option. 

" The contract was submitted to the Costa Rican Congress on 
November 4, 1913, and referred to a Committee of Public Works, 
of which Mr. Alfredo Gonzalez, later President of Costa Rica, then 
a Congressman, was a member. 

" The said Committee highly recommended the approval of the 
Pearson concession and, accordingly, Congress accepted it on first and 
second readings. 

" When the contract came up for third reading, the United 
States Government had taken an interest in the matter and advised 
the Costa Rican Government that it would not look with favor upon 
the granting of this contract to British interests. 

" Accordingly, Congress convened in secret session and, in the 
third reading, rejected the Pearson concession. 

" For further details in the matter and a statement of policy on 
the part of Secretary Knox in a letter addressed to Dr. Luis Ander- 
son, you may refer to the latter. 

"'Second Attempt of Pearson Interests in Costa Rica. 

" Prior to the proposed Pearson contract, denouncements of oil 
zones in Costa Rica were open to all private parties, in the same 
manner as ordinary mining claims in our country. Upon the request 
of the Pearson interests, the Government thereupon proceeded to 
enact a law nationalizing the petroleum resources of the country and 
prohibiting all denouncements. 

" At that time, close to a million acres had been denounced by 
various private parties, covering the most probable oil zones of the 
country. 

" The Pearson interests then considered the acquisition of all 
these claims. However, they were in the hands of about three 
hundred individuals, and no unity existeed between them. 

" The interest awakened by the Pearsons in the oil of Costa Rica 
acted as an incentive for Mr. Diego Povedano (a prominent mine 
operator) to unite these three hundred denouncers, and the result 



14 

was the formation of the National Petroleum Company (Compafiia 
National de Petroleo), to which most of the oil claims were 
transferred. 

" Various parties began at once to plan the acquisition of that 
company's holdings. The most instrumental among them were 
Alfonso Altschul, a German, now on the blacklist, and an agent of 
the Krupp works in Central America, and Dr. Manuel Dieguez, a 
Guatemalan attorney, residing in Costa Rica, of very pronounced and 
open pro-German tendencies * * *." 

This letter (of June 14, 1918) was written on the occasion of a more 
recent European attempt to secure oil lands adjacent to the proposed Nica- 
ragua Canal, and the Legation so inforn.ed the State Department, as shown 
in the following reply from our envoy (of June 15, 1918) : 

" I wish to acknowledge receipt of your interesting compilation 
of data on oil matters in Central America and Colombia in connection 
with the pending Amory concession and to inform you that I have 
sent copies of the letter to the Department of State for its infor- 
mation." 

Had the United States Government not acted in the nick of time, to 
prevent the legislative approval of the British petroleum monopoly in Costa 
Rica in 1913, this booklet could never have been written. 

After the rejection of the English grant, the Costa Rican Congress pro- 
ceeded to nationalize the petroleum of the country, but as, under the consti- 
tution, no law can be retroactive, the decree had to exempt such oil areas as 
had been previously acquired by private parties. These were left valid and 
exploitable under the laws then in force, and it so happened that they covered 
practically all of the probable deposits in the country. Consequently, who- 
ever should have acquired the private rights would have been in practical 
control of the petroleum situation. This explains the subsequent British, 
German and American attempts to acquire the oil denouncements or claims. 

A bona-fide all-American group, composed of Leo J. Greulich and 
Frank S. Stelling (Oklahoma oil men), Herbert Noble (a New York attor- 
ney), Washington S. Valentine (also of that city, who had been prominent 
for over thirty years in Central American railroad and mining matters), and 
the writer leased them in 1915. It was soon apparent that the Costa Rican 
Government, under the presidency of Alfredo Gonzalez, in favor of Euro- 
pean interests, was opposed to American initiative, and the resulting 
complications hereinafter related can only be ascribed to his anti-Ameri- 
canism. For a full understanding of the situation, it is necessary to acquaint 
the reader with the political status in Costa Rica between 1913 — when 
Alfredo Gonzalez, as a member of Congress, championed the European oil 
monopoly — and March, 1915, when the American group appeared on the 
scene in control of the private petroleum zones. 



15 



'f^HOW THE KAISER SUCCEEDED IN BOSSING COSTA RICA. 

In the fall of 1913, the three traditional political parties in Costa Rica 
were striving to elect their candidates for the 1914-1918 presidential 
period. The Civilistas had nominated former President Rafael Yglesias; 
the Duranistas, Dr. Carlos Duran, a prominent physician ; and the Fernan- 
distas, Maximo Fernandez, the " Bryan of Costa Rica," who had run various 
times. 

The election failed, as none of the candidates secured the Yninimum 
number of votes required by the constitution. It was therefore incumbent 
upon Congress to designate a President from among these candidates. 

Federico Tinoco, until recently President of Costa Rica, a gentleman 
of good family, educated in Belgium and the United States, possessed 
strong personal magnetism and the political " know how." To cut the 
Gordian knot, he persuaded the Duranistas and Fernandistas to combine, 
withdraw their candidates, and appoint in their stead a figurehead from 
among the members of Congress, as President under the direction of a 
coalition cabinet jointly named by both parties. 

The choice fell upon Alfredo Gonzalez, an inofifensive and unpretentious 
country notary, about thirty-five years of age. Of good standing in his pro- 
vincial community, he had been elected to Congress but never taken a promi- 
nent part in the debates, except when the European oil monopoly was under 
discussion. Gonzalez had been its strongest advocate. 

Don Alfredo's disposition was easy-going and jocular. His unimpor- 
tant record had not qualified him for presidential timber, and the proposition 
to make him Chief Magistrate came to him like a thunderbolt. When 
Federico Tinoco, early in 1914, communicated the decision to him in the 
name of the combined parties, Don Alfredo thought it was a huge joke. 

" Pull it off on someone else," he said, with a hearty laugh. " Whoever 
thought of me as President? Why, hardly anyone knows of my existence. 
If, out of a clear sky, you make me President like this, you had better be 
careful because I might kick you all out and become Kaiser." 

" We are not afraid of that, Alfredo," Tinoco replied ; " the arrange- 
ment is that you are to be a sort of democratic Swiss President. We will 
name your cabinet, composed of Duranistas and Fernandistas. All you have 
to do is to simply follow the lead which they will give you." 

Gonzalez accepted and Tinoco took him to his town house; but when 
It came down to action, he " got cold feet " and refused to take the delegates 
of the combined parties seriously. In fact, it was only after a day's coaxing 
behind closed doors in Tinoco's home that the fortunate or unfortunate man 
was induced to move to the Costa Rican White House. 



16 



10 CENTIMOS 



Ntimero 44 




Director: FRANCISCO SOLER 



/ 



FALCO * BORRASE, Editoro 
Apartado de Corrcos N". 63A 



San Jose, Cotta Rica, 13 de Julio de 1916 



CONDICIONE& CoiURicatMO 
trimeilre.'T? Av. Eite, N° 42 



Preparatives para la reforma 




PREPARING FOR THE REFORM 

Johann Ktimpel, nicknamed " Kultur " or "Rasputin of Costa Rica" is shown mag- 
nifying President Gonzalez' hand, in order to fit him for his dictatorial grasp over 
the country. Kiimpel, a Hun propagandist, was Gonzalez' closest friend and advisor, 
and in joint control with him of the Pro-German daily, "El Imparcial," which they 
had founded together. 



17 

The political program had been worked out and a cabinet named for 
him. Pacts, embodying this program, were thereupon drawn up and Gon- 
zalez subscribed to them. Among other things, it was stipulated that 
Gonzalez should, under no circumstances, run for a second term. It was 
also agreed that Federico Tinoco, in order to guarantee the obligations 
assumed by him, should remain as Minister of War during Don Alfredo's 
term of office. 

On May 18, 1914, the new President assumed the reins of government, i 
That was the time when the Kaiser's plans for the European conflagration 
were about to mature, the murder of the Austrian Archduke occurring five 
weeks later. The secret intrigue machinery of the Hun was then in full 
swing throughout this hemisphere. Clever agents had settled down every- 
where and cipher messages were being rushed from the Berlin Foreign 
Ofifice across the Atlantic in all directions. 

The control of Costa Rica was of the utmost importance to Germany, 
as aerial attacks could be readily launched from the uninhabitated southern 
section of that Republic against the Panama Canal, a distance of only about 
150 miles. The country was also considered very useful as a wireless relay 
station. Powerful machinery at Hanover or Nauen transmitted messages 
directly to the Hun installation in Mexico City. Another German station 
had been established in Salvador and messages could have been relayed 
easily via Costa Rica to Colombia and the rest of South America. 
r'"' The Hohenzollern master mind in Costa Rica was a clever German, by 
the name of Johann Kiimpel, who appears to have been for years, and to 
be now, the head of the Hun secret organization in that country. He lived 
in Costa Rica, apparently as a peaceful cofifee planter, but the respect in- 
variably shown him by the other Germans, his close and constant relatigjis 
with Herr Erythropel, in charge of the Kaiser's Legation, and the hap- 
penings now to be pictured, show that his mission was political rather 
than commercial. When, a few months before the European War, smiling 
Destiny had lifted Gonzalez into the Presidency, nobody in Costa Rica 
gave more than passing thought to the Central American plans of the Pan- 
Germans. Little attention had, therefore, been paid to the fact that Alfredo } 
Gonzalez and Johann Kiimpel were chums of long standing and neighbors [ 
in Don Alfredo's provincial home town. Had this fact been given weight at 
the time, and a true pro-Ally placed in the Presidency, it is quite possible 
that, through the timely curbing of German intrigues in Costa Rica, much 
of the shipping disaster on this side of the Atlantic could have been avoided. 

Kiimpel has since been nicknamed the " Rasputin of Costa Rica." It is' 
no exaggeration to qualify him in this way because he soon succeeded in 
wielding over Gonzalez and the Costa Rican Government the same nefarious 
power that Rasputin had over the Czar. Almost immediately after the new 
Chief had established himself in the Presidential Mansion, it became 



18 



LA LINTERNA. 

Procedimientos rapidos 




" RAPID PROCEEDINGS." 
From " La Linterna," December 9, 



1916. 



r 

Gonzalez, in the uniform of a Prussian officer, orders the deportation to distant 
fever infected regions of the editors who had launched a campaign against the Presi- 
dent and his German coterie. In the background the program of the Republican 
Party is shown, torn to pieces. Gonzalez, upon being placed in the presidency with 
the aid of this party, qualified the pledges subscribed by him as " scraps of paper," 
when the Huns were advancing towards Brussels. 

J 



it 

parent that Kiimpel had Gonzalez under absolute control, not only in 

economic but in political and international issues as well. As a matter of 

fact, the " Rasputin " was included in the national pay-roll as special advisor 

in economic matters ; and Fetters, a German friend of Kiimpel's, was placed 

in charge of public works. Hence the Kaiser had Costa Rica well in his grip. 

I Gonzalez did not abide long by the pacts bearing his signature. He 

isoon broke with the Duranistas, in whose ranks figure the intellectuals, 

'and severed his relations with the Fernandistas, composed mostly of the 

working class. One of the Duranistas, however, remained in the Cabinet 

and has since been considered by his party as a political outcast. Federico 

Tinoco, the Minister of War, wished to resign as well, but the combined 

political factions agreed that he should swallow the bitter pill and remain, 

iSO that the country might retain at least a semblance of control in the shape 

pf a physical grip over the pro-German Government. 

\ After having thus relegated his political pacts to the scrap heap, elimi- 
nated from Government affairs the parties who had lifted him into the 
Presidency, Don Alfredo sat down with his German advisors and planned 
the best way to serve the Vaterland^ 

The first step in this direction was the purchase of modern linotypes and 
the formation of a financial combination between Kiimpel and Gonzalez, 
who drew on the public treasury for the necessary funds. A daily news- 
paper was founded, called " El Imparcial," published in Spanish, with an 
English section, for Hun propaganda and as a semi-official Government 
organ. The editorial policy was as follows : 

1. Clever articles written or inspired by President Gonzalez, 
Kiimpel and other German and pro-German writers against foreign, 
primarily American, capital and enterprises. 

2. Promotion of Hun industries, organizations and aims. 

3. Prominent publication of Teuton successes and belittling of 
Allied victories. 

4. Propaganda for Gonzalez' own administrative projects. 

5. Defense of Government actions. 

' The other daily newspaper, " La Informacion," with its evening edition, 
" La Prensa Libre," was partly owned and managed by a Frenchman, and 
naturally pro-Ally in tendency. Whilst Gonzalez dared not suppress it 
entirely, he hampered its circulation to such a degree that it would have 
perished if friends -had not paid the resulting deficit. Another newspaper, 
opposed to the Gonzalez-Kiimpel regime, called " La Republica " and 
managed by men of high professional and political standing, was stopped by 
force. Later, a comic paper, ridiculing the Gonzalez-Kiimpel combine, was 
established, called " La Linterna." It managed to exist despite the Admin- 
istration's constant obstructions, but finally Gonzalez had the editors arrested 
and exiled to the fever-infested wilds of Golfo Dulce. They were only per- 



20 











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■21 

mitted to return to the capital after the Supreme Court had granted a writ of 
habeas corpus^ 

With the approaching Armageddon in Europe, Germany felt the urgent 
need of wireless "control over Costa Rica, and, early in July, 1914, a German 
Reserve Officer by the name of Michel Schonwitz, representing the " Gesell- 
schaft fiir Drahtlose Telegraphic " of Berlin, commonly called the " Tele- 
funken," arrived at the Capital. Kiimpel took him directly to the Blue 
Castle (Costa Rican White House). 

Events were precipitating themselves in Europe. No time could be lost, 
and, on July 29, 1914, a contract was signed, whereby the Telefunken 
(evidently operating under instructions from the Berlin Foreign Office) 
secured from President Gonzalez the following concessions : 

1. Twenty-five years' wireless monopoly, renewable for an equal 
period. 

2. The right to establish anywhere in Costa Rica wireless sta- 
tions as powerful as any on the American continent. 

3. Free land for that purpose. 

4. " The Government shall grant within the amplest sphere of 
its power protection to the enterprise * * *." 

This concession was signed by Gonzalez, as President, and Alberto 
Echandi, as Minister of Public Works. Echandi was the partner of a 
German in Costa Rica who was later placed on the black-list. 

But, to be binding, this concession required legislative approval, and 
Congress was not in session. Time was of the essence, because the German 
troops were steadily advancing towards Brussels. Gonzalez, therefore, 
published in " Official Gazette " No. 39, of August 14, 1914, a decree con- 
vening Congress into special session for the express purpose of approving 
this grant. In his message to Congress, appearing with the concession in 
the above-mentioned number of the " Official Gazette," the Executive said: 
u ^ ^ t- and hence the manifest interest of the Executive 
Power to resolve this matter which is of such transcendental import- 
ance to the country * * *." 

This was too much for the United States Government, and the approval 
of the concession was prevented. The Pan-German statesmen were wise 
enough to realize that the time was not yet ripe to openly defy the United 
States. 

The writer's report to Captain Harry A. Strauss, American Intelligence 
Officer at Panama, gives further information on the aid rendered by the 
Gonzalez-Kiimpel combine to the Kaiser : 

" Costa Rican Naturalization of Germans. 

" During the Administration of President Alfredo Gonzalez, 
especially in the year 1916, several Germans received Costa Rican 



22 

citizenship papers, regardless of their short stay in that RepubHc 
(several weeks only). Such new citizens mostly left the country soon 
thereafter. Their naturalization was championed by Johann Kiimpel, 
a rich German propagandist, for years resident of Casta Rica, 
neighbor in Heredia of President Gonzalez and influential in shaping 
Gonzalez' economic and diplomatic policies. 

" Proofs: 

" Costa Rican Official Gazette No. 95, of April 27th, 1916, con- 
taining naturalization decree of one Max M. Weinberg Schaps. 

" This man arrived in Puntarenas on April 5th, 1916, went to 
San Jose, resided at the Hotel Franqais until April 26th, 1916, left 
for Puerto Limon on that day, tried to sail as a Costa Rican on an 
Italian steamer but was refused. 

" The naturalization decree says that Weinberg Schaps was ' a 
native of Germany, accidentally living in this town ' (San Jose). 

" Costa Rican Official Gazette No. 49, of February 29th, 1916, 
containing naturalization decree of one Louis Davidson Rosenberg. 
" I have no further data on this case, but shall secure them. 

" Church Propaganda. 
" A paper, now suppressed by President Tinoco, called ' La 
Nueva Era,' published pro-German utterances. It was owned by 
elements close to Bishop Storck, the general impression being that 
the Bishop himself was a part owner thereof. It was managed by 
Father Valenciano, a Catholic priest. The owners of Lehmann's 
book-store (Sauter & Co.) were also interested, as was Emil Span, 
a German chemist or naturalist. All these parties are close friends 
of the Bishop * * *." 

Many other cases might be cited to demonstrate the pro-German charac- 
ter of the Gonzalez Government; such as, the facilities given to German 
Reserve Officer Von Hellsing to sound the bays and rivers in strategic 
regions adjacent to the proposed Nicaragua Canal and accessible by air 
and water to the Panama Canal ; the plans for fortifying certain rocky 
regions dominating the Atlantic section of the proposed Nicaragua water- 
way; his anti-American publications, which were so well received by the 
pro-German part of the public in Central America, etc. 

The facts related, however, should prove sufficiently convincing for our 
present purpose. It goes without saying that the writer can fully prove 
his statements, through original documents, corroborating facts, and a host 
of witnesses, and that all of the data enumerated were furnished from time 
to time to the United States Governmicnt. 



23 



PRESIDENT GONZALEZ' SCRAP-OF-PAPER THEORY. 
His Frantic Schemes to Bar Americans from Costa Rica. 

As soon as the American interests had secured control of the oil lands, 
President Gonzalez proceeded with unusual cunning to conspire against them. 
His first step was to discourage them by claiming that the oil titles would 
lapse a year later and that he therefore strongly advised against investing 
therein. He so cabled and wrote to his Minister in Washington, Dr. 
Roberto Brenes-Mesen, a very estimable gentleman, profound scientist and 
philosopher of the highest standing. The following cable and letter from 
Gonzalez to his Minister, sent in March, 1915, are interesting. 
Cable: 

" Rights denounced. Their termination is on April 26th of 
next year. Extension requested by Rafael Montufar. I replied 
negatively. The business can be arranged directly with the Gov- 
ernment of Costa Rica." 

The rights denounced are the oil lands which the American group had 
acquired. Rafael Montufar was the agent of the original owners. 
Letter. 

" The petroleum question is one of great importance to us, 
inasmuch as it constitutes one of the strongest hopes of the state. 
The so-called National Company is thinking of exploiting the 
industry. That Company is represented in New York by Rafael 
Montufar, but I understand that it will not be able to negotiate upon 
the basis of petroleum for the simple reason that the term for the 
practical establishment of the industry lapses on April 26, 1916, 
according to the decree of April 18, 1914, and more time would be 
required to deal with any American company, inasmuch as the local 
company has no capital. The National Company has tried to secure 
the granting of an extension until two years after the signing of the 
European peace, so that its right may not lapse, but I have refused 
this extension. At any cost I want those denouncements to be ter- 
minated, so that, in accordance with the law, all the petroleum 
deposits in the country remain the property of the state. Therefore, 
I believe that in view of this status, it is only from the Government 
that petroleum mines may be definitely secured.'' 

It is interesting to point out the similarity between President Gonzalez' 
petroleum policy, as outlined in this letter of four years ago, and the attitude 
assumed in the oil question by President Carranza of Mexico. 

Gonzalez was well versed in the German " scrap-of-paper " theory. He 



24 

realized that by refusing to deal with Americans of standing he would 
exhibit himself openly as anti-American, especially after he had crossed the 
thin ice of the Telefunken case. He invited the United States group, there- 
fore, to enter into a special contract with his Government and abandon the 
privately acquired lands. The agreement was so framed as not to be valid 
without legislative approval. His sly scheme was evidently not to submit 
such a contract to Congress until after the lapsing of the acquired rights, 
and then use pressure upon Congress to have the American concession 
rejected, thereby leaving the American interests " high and dry." That this 
was his plan is fully proven by subsequent events. His first step was to 
officially suggest a contract with the Government, as shown by the following 
letter of March 13, 1915, from his Washington Minister, Dr. Brenes-Mesen, 
to the oil men : 

" In accordance with the reply from my Government, I desire to 
inform you that the rights represented by our mutual friend, Mr. 
Rafael Montufar, will lapse in the coming year, and even though a 
negative reply was given to a proposition for an extension, the 
Government of the Republic is well disposed to arrange the 
; business directly with the Company to be formed here. It appears 

' to me, therefore, that it would be best not to lose time, and, for that 
reason, as well as on account of the offer which I have made to you 
and to Mr. Stelling, I hasten to advise you of the attitude of the 
Costa Rican Government in regard to this business, which I trust 
will be lucrative for you, so that it may likewise be for my country." 

It has later been convincingly shown that Dr. Brenes-Mesen, who 
signed this letter, trusted the good faith of his Government and had no 
knowledge of Gonzalez' wily anti-American schemes. At that time the 
writer himself had no reason for in the least doubting the sincerity of the 
Costa Rican Government, the Alinister's personality alone being sufficient 
to invite full confidence. Gonzalez' plan was therefore accepted, and the 
Costa Rican Legation extended to the oil men official letters of introduction 
to the President of the Republic and the Minister of Foreign Afifairs. 

Two months later, Mariano Guardia, Secretary of Finance in the Gon- 
zalez Cabinet, arrived in this country authorized by the President to work 
out the oil contract with the American group. The Costa Rican Minister 
in Washington thereupon sent Mr. Guardia the following letter on May 
28, 1915: 

" Being greatly interested in the petroleum business of Costa 
Rica for what it will probably mean for our country, I would ask you 
that you communicate, on your arrival in New York, with Mr. 
Washington S. Valentine, 17 Battery Place, a prominent person, who 
forms part of the Company. I believe that you can take with you 
to Costa Rica excellent news and perhaps a definite arrangement 



25 

advantageous for Costa Rica and for the Company to be formed 
here." 

Numerous conferences were held by the American oil men with Mr. 
Guardia, as agent for the Gonzalez Government, and eventually a contract 
was framed, agreed upon and handed to Dr. Brenes-Mesen, who, having 
resigned his Washington post, was returning to Costa Rica. The capital- 
ists were unwilling to proceed there themselves unless Gonzalez would 
signify his prior approval in principle of the oil contract as drafted. This 
the President did, as shown in the following letter from Dr. Brenes-Mesen, 
dated Costa Rica, June 22, 1915; to the oil group in New York: 

" It gives me much pleasure to confirm my cable of this day, 
which, with its only word 'Success', has revealed to you that the 
negotiations entrusted to me have been accepted by the President 
of the Republic. 

" He has agreed to deal directly with the American Company, 
with the understanding that that Company, in turn, will deal with 
the Compaiiia Nacional quite independent of Government action. 
That is to say, the Government maintains its attitude towards the 
latter. It will not extend the concession contained in the denounce- 
ments, but the Government believes, as you and I do, that it would 
be well for the American Company to interest the Compaiiia Nacional 
in its business, on the one hand because in this manner the work will 
begin immediately, and on the other, on account of the ties of 
sympathy which will thereby be established between natives and 
foreigners, this constituting a strength the value of which you will 
know how to appreciate. ' 

"Inasmuch as the Pearsons (British concern), according to 
the President's statement, offered a 10 per cent, and a 12 per cent, 
royalty, I deemed it prudent to state that you would have no difiiiculty 
in dealing upon a similar basis * * ." 
In August, 1915, the American principals arrived in Costa Rica and 
were well received by the President and the officialdom. However, Gon- 
zalez did not like the tentative agreement as drafted in New York, and 
personally drew up another. Lengthy discussions followed with the Presi- 
dent and the Minister of Public Works; amendments were agreed upon 
and, finally, on September 23, 1915, a contract was signed by Mr. Greulich, 
heading the United States group, President Gonzalez, and the Minister of 
Public Works, Enrique Pinto. This contract was recorded in the official 
book containing government initiatives, with the following closing phrase : 
u * * * jj^ £^j|.|^ whereof the contracting parties subscribed 
hereto at San Jose, on September 23, 1915, Enrique Pinto, L. J. 
GreuHch, San Jose, September 23, 1915. The foregoing contract is 
approved, Gonzales. The Secretary of State in the Ministry of 
Public Works. Pinto." 



26 






ol]*? iflailV^rf'lhi^teria. 



c 



i 



27 



MANUEL CASTRO QUESADA, WASHINGTON MINISTER, TO 
PRESIDENT GONZALEZ. 

" New York, December 17th, 1915. 
" My Dear Alfredo : 

" Yesterday I wrote you a long letter on purely personal matters ; 
to-day I want to discuss with you political or, rather, public affairs. 

" Before all, a big hug for the complete and overwhelming 
triumph that you have had in the elections and which, to the greater 
discredit of our enemies, was superior even to what you had figured 
on just before. 

" This is the best muzzle for your opponents who have exhibited 
themselves most sadly. Above all, Don Rafael. That a party chief 
aspiring to the presidency should not have * * * " 

The elections mentioned are those of Congressmen where, through the 
suppression of freo suffrage, Gonzalez had been successful in securing what 
he considered a safe majority. There follows a diatribe against Rafael 
Yglesias (Don Rafael) who had. been President for eight successive years, 
leaving his high office poorer than when he assumed it, after having given 
wonderful impulse to the development of his country. 



28 

President Gonzalez then presented to Mr. Greulich the pen with which 
the document had been signed. Handshakes. Entertainments. Pleasant 
words. And Mr. Greulich returned to the States to make his financial 
arrangements and assemble his geological staff, drilling outfits, etc. 

A contract of this sort, for the leasing and development of national 
wealth, requires the ratification of the Legislature. President Gonzalez 
promised to secure this within a few weeks, stating that the matter should 
be left to him, as he knew how to handle his Congressmen and expected no 
trouble whatever. 

The writer, with his family, remained in Costa Rica, in charge of the 
petroleum interests, and formed a cordial friendship with the President 
and other prominent Costa Ricans. Invitations were plentiful, Don Alfredo 
making himself very agreeable. 

Weeks passed pleasantly but Gonzalez made no sign of convening Con- 
gress for the approval of the grant. 

" That is all right," he said to the author "you may go ahead 
getting your machinery down here. I shall call the Legislature in 
a few weeks to ratify the concession." 
Watchful waiting and, finally, another attempt to have Gonzalez carry 
out his part of the agreement. 

" The trouble is this, my dear friend," he said, " I am afraid 

of a group of Congressmen who want to oppose everything I do. 

Here are their names. Talk to them and have them sign a statement 

wherein they obligate themselves not to discuss politics when I 

convene them for the oil matter, and to limit the discussion solely 

to your contract." 

The author agreed to do this and, a few days later, was in position to 

present to the Executive the following document signed by twenty-two out 

of a total of forty-three Congressmen, a sufficient majority to pass the 

measure : 

"San Jose, October 9, 1915. 
" The Editor of ' La Informacion' , City. 

" Dear Sir — In today's issue of 'La Informacion' there appears 
an interview with the Minister of Fomento, wherein the possibility 
of calling Congress into extra session is considered, for the purpose 
of taking cognizance of the recently signed contract for the exploita- 
tion of petroleum mines. 

" Recognizing the importance to the economic life of the country 
of the petroleum, the Minister of Fomento expresses the advisability 
of dealing with the matter at once, in order to have that rich industry- 
established on our soil as soon as possible ; but he states that, owing 
to special circumstances, the Executive will not convene Congress at 
present. 



29 

" Your paper inquires what these special circumstances are which 
prevent the Executive from calHng Congress at this moment and 
whether among them may be counted the fear that politics will be 
injected into the petroleum issue? 

" We deem it our duty and a matter of self-pride to clear the 
doubts of your paper and, through it, make it plain to the country 
as a whole that we declare very emphatically, in order to safeguard 
our position as representatives, that we have never attempted in 
Congress to carry on a systematically hostile policy against the 
Chief of State. 

" The present case of the petroleum contract makes it clear to us 
that not only is it not a matter of imposing new taxes upon the citi- 
zen but, quite the reverse, it creates an additional fiscal income, a new 
source of wealth for the Republic. This is enough to make us in 
Congress consider the matter from the patriotic viewpoint and, in 
noyvise, with a feeling of political partisanship. 

" Let this be the opportunity for us to state that, if the Executive 
calls Congress into special session to debate the petroleum contract 
we shall do nothing but examine it, our minds free from all ideas of 
politics, and if, as we trust, it is satisfactory to the country, approve it. 

" We remain, dear sir, 

" Yours very truly, 

" For myself and for Lie, Francisco Faerron, 

" Luis Anderson, 
" Leon Cortes, 
"Juan R. Flores C, 
" Juan Ma. Solera, 
" Aristides Aguero, 
" Arturo Volio, 

" For myself and my brother, Napoleon Briceno, 

" Leonidas Briceno, 
" Jenaro Leiva, 
" Alberto Vargas Calvo, 
" Leonidas Pacheco, 
"F. Aguilar B., 
" Carlos Duran, 
" Manual J, Grillo, 
" Carlos Leiva Q., 
"V. Lachner Sandoval, 
" Marcial Alcizar_, 
" R. Jimenez S., 
" Rafael Calderon Munoz. 



30- 

" Neither systematic nor any other kind of poHtics against the 
Government in Congress. 

" F. DE P. Amador. 

" The undersigned agrees that Congress be convened in special 
session for the purpose of considering the petroleum contract recently 
entered into between the Government and an American company. 

" R. Rivera B." 

The signatures include those of prominent Costa Ricans, wealthy, of 
absolute integrity and high professional standing as lawyers, physicians and 
diplomats. These men, certainly above reproach, signed the appeal to the 
President because they considered the exploitation of the Costa Rican oil 
fields by American capital as the most feasible means of providing new 
revenue to the depleted treasury, without resorting to the creation of new 
taxes. 

This document placed Gonzalez in a peculiar plight. He never expected 
that a legislative majority would sign so strong and binding an appeal. If 
he acted upon it, the American grant was certain of approval. How pre- 
vent it? It was the acid test of his good faith under which his gilded 
veneer dissolved. Nice words, pleasant smiles and a picnic were his diplo- 
matic reply, and the irresistable request, as a personal favor, that the matter 
be delayed a little longer. 

" Early in December," he said, " that is to say, only five weeks 
from now, there will be an election of Congressmen and half of the 
present Legislature will be out of a job. The new half to take 
their place will be mine — only mine," and he smiled slyly. " I 
promise you that I will convene Congress immediately after the 
Congressional elections, and your contract will then go through 
flying * * *." 

What else was there to do but wait? The writer then had no reason 
for doubting the President's sincerity clothed in his charming and deceiving 
personality. An Englishman, a Frenchman or a German would have been 
assisted by his Government in such a case, through the Legation's friendly 
offices ; but for an American classified as a " concession hunter " under 
President Wilson's interpretation, what chance on earth was there, however 
willing our envoy? 

Nevertheless, the writer deemed it wise to make the attempt and in- 
form the State Department of the situation, by writing on November 9, 
1915, a letter to Hon. Edward J. Hale, American Minister to Costa Ric^, 
wherein, after submitting a copy of the petroleum concession and point- 
ing out that the Government of Costa Rica was receiving thereunder as 



31 

large a royalty as any holder of oil lands in the States, the following state- 
ment was made ; 

" * * * His Excellency, the President of Costa Rica, has 
expressed to me his desire of obtaining a speedy congressional ap- 
proval of the concession. He considers it of immense value to the 
country, as indications warrant the hope that the petroleum income 
will eventually become the largest source of wealth in Costa Rica. 
However, there being evidence of peaceful but strong political dis- 
turbance in view of the pending congressional elections, His Excel- 
lency preferred not to risk distortion of the petroleum contract by 
dissatisfied political elements in Congress. He intends to submit the 
concession and urge its approval about the middle of December next. 
His Excellency, as well as his Cabinet, feel very confident that the 
contract will be approved by Congress without difficulty. My own 
impression is equally favorable, as, after discussing the matter with 
a majority of Congressmen, I found unanimous approval. 

" We have acquired about 98 per cent, of all existing private 
petroleum rights totalling about 1,000,000 acres. Consequently close 
to 1,000 Costa Rican families are interested with us. This seems 
to have created general harmony, as the people have become con- 
vinced that our policy will not be one of absorption and monopoliza- 
tion, as occurred unfortunately in other large American enterprises 
in Central America, but a policy of collaboration and harmonization. 

" I must add that our enterprise is thoroughly and purely Amer- 
ican, composed solely of xA.mericans, and will be organized and 
financed in the United States." 

On November 25, 1915, the author wrote to Herbert Noble, a New 
York attorney, among other things the following: 

" * * * The personal relations which it has been possible for 
me to cultivate with the President have enabled me to talk with him 
from time to time about pending matters. My conclusion is un- 
changed, that he is absolutely sincere and very well disposed towards 
the petroleum contract. His intention still is to call Congress together 
to settle this and your banana contract, as soon after the coming 
elections as he considers the various rebellious political elements 
sufficiently quieted down. He has explained to me fully matters 
pertaining to internal politics, evidently with a view to making us 
realize the advisability of not convening Congress before the end of 
December or the beginning of January," 

December came. The congressional elections, or rather quasi-elections, 
were held, and, by deliberately suppressing free suffrage, Gonzalez secured 
what he thought was a safe Government majority. . . , The Germans 



2,2 

considered themselves, therefore, stronger than ever. The Kaiser's plans 
had made as rapid strides in Costa Rica, the President and his Hun coterie 
thought, as the German troops on the Western Front 

Immediately after the Executive had thus strengthened himself in Con- 
gress, his attitude towards the American oil enterprise changed as if by 
magic. Kiimpel, the Rasputin, Altschul, the German Krupp Agent, Fetters, 
the Hun advisor, and Dieguez, the counsellor and agent of European petro- 
leum interests, had been in frequent conferences with him, as was later 
disclosed, and that had sealed the immediate fate of the American grant. 
The author's letter to Herbert Noble, of December 23, 1915, explains the 
impasse more fully : 

" I had about a two-hours' talk with the Fresident. The various 
points discussed are so eminently important that I shall enumerate 
them, as I recall them : 

" 1. The Fresident stated outright that he would not convene 
Congress before next May, as the convening of Congress now would 
mean to again give Congress, of which the opposition holds a major- 
ity, a chance to attack the legality of the recent elections on the 
ground of Government pressure. 

" 2. I expressed my surprise to the Fresident and said that on 
the strength of his promise to me prior to my departure for Fanama, 
I had cabled you that Dr. Greulich had made his preparations accord- 
ingly, and that, therefore, the sudden change of decision would cause 
grave damage to the enterprise. 

" 3. The President's reply was that there were other reasons, 
apart from raisons d'etat, which had firmly decided him not to con- 
vene Congress before May, the principal reason being that most of 
the Government officials. Congressmen and private parties, who had 
spoken in favor of the Greulich contract, did so, not for patriotic 
reasons, but because they were personally interested.. 

" My pleasant personal relations with the Fresident permitted 
me to interrupt him indignantly at the inference, but the Fresident 
immediately stated that I had misunderstood him, that he fully 
recognized that we had acted most correctly in the matter from 
beginning to end, but that many important people were interested 
in the petroleum through the Compania Nacional, the shares of which 
are widely distributed, and that the Cia Nacional had become valuable 
through our contract with it. 

"I replied that it was the Fresident and the Minister of Foment© 
who had insisted that a clause be inserted in the Greulich contract 
safeguarding acquired rights. The Fresident did nort let me go on,, 
but said that he understood very well that our contract with the Cia. 



33 

Nacional was prompted by good business policy, and that he, in our 
place, would have acted in the same manner; that is to say, by 
acquiring all existing rights, regardless of their value, merely for the 
sake of good feeling. What he meant, he said, was that speculators 
had taken advantage of the situation and botight shares and that he 
did not propose to play into their hands by having our contract ap- 
proved now. I thereupon called the President's attention to the fact 
that, after April, the situation would be identical, as our contract 
with the Cia obligated us to pay it its 2 per cent, after as well as 
before next April * * *^ 

" 5. I explained * * * that based upon the President's 
promises Dr. Greulich had made his preparations by organizing, etc., 
and that delay would cause serious difficulties. 

" 6. The President thereupon made the surprising statement 
that he did not consider our contract as beneficial to the country, that 
the development of petroleum in Mexico and Venezuela had caused 
detriment to those countries, politically and otherwise, that it meant 
the concentration of too great an individual power; that, therefore, he 
was not at all eager to see the petroleum developed. I replied by 
comparing the Mexican Pearson contract with the Greulich contract, 
showing the maximum of control which, through its arbitration 
clause, the Government would hold. I asked the President to name 
the points which caused him the fear expressed, and he referred to 
our right to cross and use all rivers, build telegraph lines anywhere, 
the public utility feature, etc. My answer was that this really was a 
matter for proper limitation and language and that I considered the 
Greulich contract as amply covering it. The President thereupon 
made further argument unnecessary by agreeing that these privileges 
had been sufficiently limited and defined in the Greulich contract, and 
that in his remark he merely referred to liberal concessions generally. 

" * * * The President hastened to state that he was generally 
in favor of the contract, inasmuch as it had been based entirely upon 
the Pearson concession in favor of which he had been at the time of 
its presentation, and that, therefore, he had signed the Greulich con- 
tract. * * * 

" I truly believe that the President thinks he is acting quite cor- 
rectly towards us — the idea being that an American must be treated 
exactly as an American is usually pictured to the Latin as dealing 
toward him, in other words, unscrupulously. To promise every^thing 
and keep nothing appears to him as absolutely honest, as he considers 
that to be the American viewpoint. 

" I really think that we have made a serious mistake in consider- 
ing the President as frank and straightforward from our standpoint." 



34 

A few days later, on December 27, 1915, President Gonzalez fell 
sufficiently justified by the advance of the German armies on all fronts 
to come out publicly with an attack against the Monroe Doctrine. The 
German propaganda paper " El Imparcial," then fully recognized by every- 
one as jointly owned and controlled by the Gonzalez Government and 
German interests, and as the semi-official mouthpiece of Gonzalez, Kiimpel 
and other Germans, published a sharp editorial in Spanish and English, 
containing the following passages : 

" * * * nor would the Government of Costa Rica have ever 
accepted the interpretation that some American business men want 
to give to the Monroe Doctrine, in order to entirely control, for their 
own benefit, the wealth of this continent to the exclusion of European 
capital and enterprise. Were Costa Rica, which is a small country, 
forced to accept this Japanese interpretation of a ' closed door/ such 
would not be the case luith Great Britain, which is a powerfid country 
and which would never have stood for it, as its acceptance would have 
meant the absolute renouncement on the part of the British to employ 
their energies and invest their capital in America. 

" It has been rumored that the Administration will call Con- 
gress into special session on the 15th of January in order to discuss 
the subject of the oil grants. This report is also false. The conces- 
sion granted to the National Oil Company will expire in the coming 
month of April and the Congress of May will be the one called upon 
to consider said contract which, even if signed by the President, still 
requires the formal and definite ratification of Congress which prob- 
ably will refuse to grant those concessions as the contract which is 
apparently advantageous for the country is in reality unacceptable 

jf: sH * 

" These oil fields being located near the Canal Zone, Costa Rica 
could easily supply fuel to merchantmen and warships, and the region 
of Talamunca would rapidly acquire the importance of the Tampico 
region in Mexico, the ivells of which tvere confiscated about six 
months ago by the Carranza Government, which has now been recog- 
nised by the United States and by the governments of the countries 
comprising the Quadruple and the Double Ententes. * * * 

" Some will ask : Why is it then that the Adminstration accepted 
that contract with Messrs. Greulich, Noble and Valentine and will 
submit in due course to Congress? The answer is obvious: The 
Administration fulfills its duty in referring to Congress such impor- 
tant matters which need the amplest study of both branches of the 
Government. This does not mean that the Administration absolutely 
recommends this contract in the manner customary in a project 
acknowledged and adopted as emanating from the Executive himself. 



35 

" * * * Fate has not yet said the last word in reference to 
the future of these wonderful countries." 

With remarkable effrontery, Gonzalez disclaimed that he himself had 
invited the American group to come to Costa Rica and personally elaborated 
the contract. This opened the writer's eyes and he began to suspect that 
he had been bluffed by the President. Upon calling on him and, in the 
same friendly spirit which had existed between them, asking him for an 
explanation, Gonzalez was surprisingly frank in stating that he was opposed 
to all large American enterprises. 

This, it seemed, was the time for our Legation to use its good offices, 
and, on December 30th, 1915, the author addressed a letter to the American 
Minister saying, among other things, the following: 

" * * * The President claims that if the present Congress is 
convened, it will result in a political fight against the Government in 
view of the outraged condition of the country as a result of the 
electoral pressure at the last congressional elections. This is incor- 
rect, as I have the written and public promise of the majority of the 
present members of Congress not to occupy themselves with politics 
when the petroleum contract is presented. This statement was given 
to me voluntarily, as the people consider the exploitation of petroleum 
without delay as a vital point in providing revenue during these 
critical financial times in Costa Rica. If the President refuses there- 
fore to convene Congress now as promised, it is due to his decision 
to prevent the approval of the contract. 

" On December 27th last, the enclosed editorial was published by 
"El Imparcial " (the government paper). 

" I saw the President about it and he told me that the editorial 
was practically dictated by him ; that he meant every word of it ; that 
he had no reason for being guided by the wishes of the United 
States ; that he had no reason for giving American interests prefer- 
ence in any way and that, after the termination of the European 
War, Costa Rica might be in an entirely different position strat- 
egically. That is what he refers to in the underscored passages of 
the editorial. He said that if England or any other European country 
wanted the Costa Rican oil and coal, there was nothing to prevent 
him from granting any concession desired. * * * 

" My strong impression is that any official or unofficial interest 
shown by you in the approval of the Greulich contract will result in 
the immediate change of attitude on the part of the Government. 



36 

On January 1, 1916, the author wrote to the American minister again, 
as follows : 

" The President of Costa Rica thereafter told me that he would 
see with displeasure the establishment of large American enterprises 
in Costa Rica, as the United States would thereby acquire too great 
an influence, dangerous to Costa Rica in view of her strategic posi- 
tion. He insinuated that, after the termination of the European War, 
European capital might be obtained on better terms. 

" The President of Costa Rica later repeated this statement to 
others. * * * 

" Through great pressure, the President of Costa Rica * * * 
recently elected a Congress composed of Government tools, following 
Government suggestions blindly. Its first regular session will be next 
May. The President of Costa Rica, to discharge his responsibility, 
wants to present the Greulich contract then in such a manner as to 
have Congress reject it. 

" If the present Congress is called immediately * * * the Greu- 
lich contract will be approved, as the whole country is warmly in its 
favor and as the present Congress represents the people impartially." 

Another letter of the same date, to the American minister contains the 
following passages : 

" I had a very confidential conversation with the Minister of 
Finance and Acting Minister of Foreign Affairs. He disagrees en- 
tirely with the change of policy on the part of the Government and 
considers the evident unfriendly attitude toward American enterprise 
as dangerous for Costa Rica. He considers the Greulich contract as 
absolutely binding on the Government, inasmuch as the President 
himself drafted the contract, as can be seen from penciled annotations 
in his own handwriting, and highly approved of it, satisfied that he 
had obtained a good bargain for his country. He emphasized the 
fact that this contract was the outcome of months of work, of dis- 
cussions between the Government officials. Dr. Greulich, Mr. Herbert 
Noble and myself and that the President had formally promised, not 
only to ourselves but to many persons of good standing. Congressmen 
and his Cabinet, that he would convene Congress in special session 
directly after the election of December 5th. The Minister also stated 
that he considered the editorial referred to (of December 27) as 
offensive to the United States and Americans generally and that he 
would never subscribe to such a fatal policy. He added that the 
Government of Costa Rica was bound by word of honor and inter- 
national custom to fulfill its promise of convening Congress early in 
January for the purpose of ratifying the Greulich contract and 
present it with a strong message of recommendation. * * * 



37 

" The President of Costa Rica yesterday expressed to Dr. 
Saturnine Medal, Justice of the Central American Peace Court, views 
similar to those he gave me on December 27, regarding the undesir- 
ability of large American enterprises * * *." 

Realizing that serious complications were threatening, the writer made 
a further attempt to reach a friendly solution and on January 6th, 1916, 
wrote to the President the following letter : 

" As I had the pleasure of stating to Your Excellency, Mr. 
Greulich went ahead, immediately after your Excellency signed the 
petroleum contract, with the organization and necessary preparations 
regarding machinery, experts, etc., as the said contract appeared so 
well received in official and private circles as to fully justify such 
preparations. 

" It would appear regrettable to me if, as a result of existing 
circumstances, on the one hand, your progressive country would be 
deprived of the immediate development of a new and probably very 
large industry and, on the other, Mr. Greulich would be obliged to 
withdraw his organization with financial loss. Therefore, it has 
occurred to me that Mr. Greulich might begin, under the respective 
mining laws, to work the oil-bearing private lands acquired by him, 
before next May, preferably at once. 

" Nevertheless, I would not like to advise Mr. Greulich to go 
ahead if, for any reason, Your Excellency would see with displeasure 
the immediate development of the petroleum industry in the regions 
of the acquired rights. 

" Therefore, I have taken the liberty of asking your Excel- 
lency's opinion with all frankness and confidence, and I hope that 
he will be so kind as to give it to me, so that I may advise at once 
Mr. Greulich by cable. 

" With my best regards and repeating my sincerest wishes for 
a happy New Year, I have the honor to remain, etc." 

The President was forced by this letter into a tight comer, therefore 
decided to play the wise statesman stunt, as advised by the Kiimpel clique, 
and replied on January 7th as follows : 

" The contracts which the Executive signs require for their 
validity the approval of Congress. I think, therefore, that to carry 
them out before proper legislation is premature. 

" As to the other rights which Mr. Greulich may have, not 
emanating from the contract pending legislative approval, I see no 
objection to his carrying them out in the manner which he may 



38 

deem best, especially if he does so according to the law guaranteeing 
those rights. 

" This answers your favor of yesterday and I take advantage 
of this opportunity to wish you and your distinguished wife every 
kind of happiness during the year just commenced." 

Upon the receipt of this letter the author called on the President and 
expressed to him his satisfaction therewith, informing him at the same 
time that, based upon the license it contained, he had advised his principals 
thereof by cable and that geological and drilling operations on the privately 
acquired oil zones would be commenced at once, regardless of the approval 
or rejection of the concession. Gonzalez replied that the American group 
was free to do so, and this was taken as an assurance sufficient to warrant 
the operations. The geological and survey work was organized, drilling 
machinery sent down and a large amount invested in the development of 
the privately owned properties. 

With the advance of the German troops in Europe, triumphantly 
announced in glaring headlines and pretentious editorials by El Imparcial, 
the President thought it wise to further fortify himself politically. The 
coming two years were to witness the success of the Pan-Germans and the 
consequent development of Latin America by the Deutsche Bank and the 
Hamburg-American Line interests. Gonzalez thought that he had secured 
the control, of Congress. Would he be suft"ciently strong to force legisla- 
tion down the throats of his deputies in the face of strong popular 
opposition ? Kiimpel and his staff found the solution. Prior to his ascen- 
sion to the Presidency in 1914, Gonzalez had assumed to cancel the campaign 
debt of the Fernandistas party to which he belonged. 

" Don't pay it," said Kiimpel, " seize and keep the documents 
guaranteeing the debt. They bear the signatures of the most im- 
portant Fernandista deputies and other valuable political elements. 
Hold the documents as a club over them. They are poor and you 
can break their neck financially if they do not obey you." 

Gonzalez accepted the suggestion and the agreement with the political 
friends who had lifted him into the presidency became a scrap of paper. 

But how get the documents ? Easy ! What is a constitution among 
friends? The writer's letter of January 1st, 1915, to the American Minister 
in Costa Rica, explains how it was done : 

" I refer to the failure of the Commercial Bank of Costa Rica. 
Part of the gold reserve of that institution had been converted 
illegally into bonds of the Northern Railway Company of Costa 
Rica. * * * Maximo Fernandez claims that the campaign ex- 
penses amount to 420,000 colones. * * * The sum of 150,000 



39 

colones, however, Maximo Fernandez induced the Commercial Bank 
to furnish against a joint note of all the interested Republicans 
guaranteed by M. Fernandez. For the purpose of raising that sum, 
the Commercial Bank mortgaged to British bankers the bonds of 
the Northern Railway of Costa Rica, which formed part of the 
reserve, as stated above. When the Commercial Bank failed, the 
note referred to of 150,000 colones was among its assets. It was 
then long overdue. A settlement was made of the affairs of the 
bank by which its affairs, including all its assets and liabilities, were 
turned over to the Government Bank, the ' Banco Internacional,' of 
which an American of absolute integrity (Mr. Walter J. Field) is 
President. 

" About ten days ago, the President instructed the receiver of 
the Commercial Bank, Mr. Ross, to request Mr. Field to deliver to 
him the note of 150,000 colones referred to. Mr. Field refused, 
stating that he was responsible for the affairs of the Commercial 
Bank and that, therefore, he could not deliver any part of its assets 
unless President Gonzalez would relieve him of all responsibility 
by requesting him in writing to deliver the note. This the President 
did and Mr. Field turned the note of 150,000 colones over to the 
President. This means the disappearance of 150,000 colones from 
the assets of the Commercial Bank without reason or accounting, 
especially without the deposit of an equivalent value. * * * " 

Feeling stronger still as a result of this high-handed move, Gonzalez 
thought that he might as well show the United States where it stood. The 
author's letter of January 6th to the American Minister gives a good idea 
of the President's stand taken towards our country : 

" Allow me to repeat to you the information given me this 
morning very confidentially by the Minister of Finance. He had 
had a recent discussion with the President regarding the petroleum 
matter. The President acknowledged that he had inspired the 
editorial referred to in my previous letters. Among other things, 
he expressed dissatisfaction with the attitude of the U. S. toward 
Central American affairs, referring particularly to the limit question 
between Costa Rica and Panama, the President being exasperated 
owing to the delay on the part of the U. S. in carrying out the White 
award. 

" The President said that he would express this view to the 
U. S., as also his view regarding the intended establishment of a 
Pan-American Court of Arbitration now discussed at Washington. 
' How can Costa Rica,' he said, ' be expected to favor such a thing, 
if the existing arbitral awards are not carried out ? ' The President 



40 









/./ 



41 



ANOTHER EDIFYING PLAN OF THE GONZALEZ CLIQUE TO 
MAKE MONEY SECRETLY. 

From confidential correspondence between Manuel Castro Quesada, 
Gonzalez' Minister Plenipotentiary in Washington, and the President 
(December 17, 1915) : 

" A very good idea occurred to me for the Government to make 
money without anybody being able to even smell it. It consists in 
raising in the contract a few points the commission agreed upon and 
for the bankers to deliver the difference to the Government. What 
do you think of it? 

" Then the loan, instead of being quoted at 94 or 95, as I am 
trying to arrange, would appear at 90, for instance, which would still 
be a rate very acceptable for our countries." 

" Hoping that before you receive this letter I shall be able to 
give you by cable good news regarding the loan, I am 

" Your affectionate 

" Manuel Castro Quesada." 

The loan which Gonzalez was trying to obtain was to be of $2,000,000.00. 
The " special commission " which his group was thinking of getting " with- 
out anybody being able to even smell it " was therefore to amount to 
$80,000.00 or $100,000.00. That was at a period when the National Treasury 
had a hard time making both ends meet and even the salaries of the minor 
Government employees could only be paid in part. 



42 






/^ iC-^^-.^'<? <'i. 



;^' 






r- 






..... .--.^^, 












ii.t ^a^^ ,,V^ ,^,-^ 7-!;-<^< i^s'iV' /r'j.i-i-t .'. 



43 



PLAN TO DEPRIVE NATIONAL TREASURY OF PROCEEDS 
FROM MUNITIONS SALE. 

From confidential correspondence between Manuel Castro Quesada, 
Gonzalez' Minister Plenipotentiary in Washington, and the President: 

" * * * the Government wished to keep in complete reserve 
the negotiation, so as to be able to dispose of the money for such 
expenses as cannot and must not be made public. The idea looks 
good to me but not its realization because, frankly, I cannot under- 
stand how it is possible to have the 1600 cases leave the garrison for 
the station without anybody perceiving it. But anyhow, as far as I 
am concerned there will be no difficulty in keeping the secret. 

" The date of delivery seems very pressing to me but it was not 
possible for me to obtain an extension; but I think that by moving 
actively, the article can well be shipped on the steamer of January 2nd 
which is really the date agreed upon." 

This letter, handwritten throughout, on the stationery of the Hotel 
Waldorf-Astoria, New York, dated December 17, 1915, consists of ten pages 
signed " Manuel Castro Quesada." In another section of the letter the 
details of the sale are explained. The price agreed upon was $30.00 per 
thousand and there were 1600 cases. The proceeds accruing to the Gonzalez 
clique would, therefore, have amounted to a handsome amount. 



44 

also said that he considered himself in no way bound by his signa- 
ture to the Greulich contract and free to contract with whomever 
else he pleased. The Minister of Finance said that he would not 
subscribe to this view. 

" I take it from these statements that the President's attitude in 
the petroleum matter is meant as a sort of retaliation against the 
attitude of the U. S. in delaying the carrying out of the White 
award." 

In true autocratic fashion, Gonzalez decided that " I'etat c'est moi." He 
needed money to carry out his designs and proceeded to get it. His chum 
and Washington Minister, Manuel Castro Quesada, was in the habit of 
writing him long-hand letters from the Legation in Washington, the Waldorf 
Astoria Hotel in New York, and the Legation's summer residence in Allen- 
hurst, N. J. Extracts from the following correspondence, penned by Castro 
from the Waldorf Astoria on December 17, 1915, give a rather interesting 
idea of the " wheels within wheels " in our hero's entourage : 

" * * * ggfQj.g ^11^ ^ i^jg i-,yg fQj- ^YiQ complete and over- 
whelming triumph that you have had in the elections and which to 
the greater discredit of our enemies was superior even to that which 
you had figured on just before. * * * 

" I am preparing a cable for Mariano which says : 

" ' I have sold munitions at $30.00 a thousand. They must be 
shipped next week or the following. They must be consigned to 
Montero. Take the present labels off and mark them again " in 
transit New York — Europe." Telegraph me if you can.' 

" The price, as I see it, cannot be better, especially if we con- 
sider that the first offer made to me was treating the article as if it 
were old metal. Possibly these munitions will be sold at the same 
price, if not more, than they cost 18 years ago. This business is due 
to Montero. The great knowledge which he has o'f people in New 
York allowed him to find a good buyer; and therefore, at the same 
time, as he lives in New York, I thought it was proper that the 
merchandise should not be consigned to me but to him. * * * 

" The Government desires to keep the transaction in complete 
reserve, so as to be able to dispose of the money for such expenses as 
cannot and must not be made public. The idea looks good to me but 
not its realisation, because frankly, I cannot understand how it i^ 
possible to have the 1,600 cases leave the garrison for the station luith- 
out anybody perceiving it. But anyhow, as far as I am concerned 
there will be no difficulty in keeping the secret. 

" The date of delivery seems very pressing to me, as it was not 
possible to obtain an extension, but I think that by moving actively. 



45 

the article can well be shipped on the steamer of January 2nd, which 
is really the date agreed upon. 

" * * * The loan which I am negotiating with the Bankers' 
Trust seems to be progressing well. It will surely be necessary to 
raise the commission of 5% which I had offered to O'Neill or accept 
more onerous conditions than those which I had asked for at the time, 
or both things at the same time, but naturally, before signing, I shall 
report to you by cable whatever may be convenient so that you may 
inform me whether you approve of it or not. The lawyer upon whom 
I count is Mr. Anderson. You know quite well that that fellow is a 
tiger as far as money goes, and, in case the business is successful, his 
account will be very large, but, at the same time, he is very efficient 
and has an almost absolute influence over people of money. He shows 
himself very optimistic, and, inasmuch as soon after Christmas he will 
have to go to England for account of the Chicago packers to make a 
claim against the British Government for the seizure of various ships, 
he is pushing the matter as much as possible so as to have everything 
resolved before his departure. It should have been decided this week, 
but, unfortunately, Mr. Kent spent it in bed. He is the Vice- 
President in charge of the business and will not return to his office 
until Monday. 

" As I cannot delay my return to Washington any longer, I shall 
leave Rafael here to discuss with Mr. Kent whatever difficulties he 
may present. At all events, he is much more efficient than I am, very 
well acquainted with the business, and, moreover, it may be said that 
he was its initiator. 

" * * * js^ very good idea occurred to me for the Govern- 
ment to make money without anybody being able to even smell it. It 
consists in raising in the contract a few points the commission to be 
agreed upon and for the bankers to deliver the difference to the Gov- 
ernm,ent. What do you think of it? 

" Then the loan, instead of being quoted at 9It- or 95, as I am 
trying to arrange, would appear at 90, for instance, which would still 
be a rate very acceptable for our countries. * * * " 

As soon as the American oil group, encouraged by President Gonzalez' 
express sanction, had commenced the development of its privately owned 
zones, the President started a vigorous campaign of opposition. 

" You cannot proceed," he said, " because your rights have lapsed." His 
Attorney General was instructed to block the work by bringing one suit 
after another, and a strong legal fight began. 

Many prominent American jurists express the opinion that Costa Rican 
lawyers are among the brightest on this continent. It is also known that the 
Courts in Costa Rica have always been fair and square, on the same ethical 



46 

level with those of the highest developed countries in our hemisphere. This 
is best illustrated by the fact that, in the little Republic mentioned, the Gov- 
ernment has for a generation lost most of its cases. The courts are entirely 
independent of politics and many judges have held office for over thirty 
years. Under the 1917 constitution, the judges of the higher courts are 
elected for life, and the Supreme Court appoints the judges of the inferior 
courts. 

As in this country, Costa Rica has a certain elite of lawyers whose 
opinions have almost decisive weight. The Governments preceding Gon- 
zalez' were in the habit of abiding by the decision of these attorneys in 
intricate legal questions. The courts have always been guided thereby to a 
great extent. This elite is composed of various former Presidents who 
happen to be leading lawyers : Asencion Esquivel, Cleto Gonzales Viquez, 
Ricardo Jimenez, J. J. Rodriguez and Bernardo Soto (now deceased), and 
such talents as Luis Anderson, who is Treasurer of the American Institute of 
International Law and was President of the Central American Peace Con- 
ference ; Leonidas Pacheco and a few others. 

As soon as the oil men's legal fight with the Gonzalez Government com- 
menced, these lawyers were consulted and all of them, in brilliantly written 
briefs, upheld the American controlled petroleum titles. To relieve the 
reader's mind of any suspicion, it is pertinent to add that the fees paid them 
were nominal. The views of the eminent statesmen named could not be, and 
certainly were not, influenced in any way by mercenary motives. 

Gonzalez made a futile attempt to counteract the weight of their 
opinions by personally influencing the judges. 

" The good of the country dictates," he said to them, " that the American 
eagle be prevented from securing this strategic stronghold. You must, as 
true patriots, apply the law in this sense." 

The courts, uninfluenced, decided in favor of the Americans in every 
instance, and the pro-German coterie' was defeated in the first struggle. 

In the meantime, the thinking public had become aroused. Over a 
thousand Costa Ricans had a royalty agreement with the concessionaire on 
the zones which they had leased to him. The President's fight was directed 
as much against them as against the concessionaire's enterprise. Gonzalez 
tried to compromise with some of the said oil zone owners by promising to 
" take care " of the most important ones among them if they would break 
their contracts with the United States group. Nobody, however, seemed to 
be disposed to bank upon Don Alfredo's promises, and practically everyone 
remained loyal to the Americans. 

The author was justified in expecting that, with his legal victory, the 
fight would be over and that Gonzalez would bow to the decision of the 
tribunals. But far from it. On the contrary, he made it plain, privately 
and publicly, through the press and in conversation, that he would continue 



47 

to fight the American enterprise tooth and nail. The writer thought, there- 
fore, that it was time to compromise, and approached the Executive with the 
proposition to abandon the concession entirely if the President would permit 
the peaceful exploitation of the privately acquired areas. It was of no avail. 
Gonzalez was insistent that American interests should not control a single 
drop of petroleum in Costa Rica. 

The matter was thereupon taken up with the Costa Rican Legation in 

Washington, the interesting result of this step being shown in a letter from 

the Minister, Manuel Castro Quesado, of May 15, 1916; to the oil group: 

" I had the pleasure of duly receiving your favor of the 11th inst.. 

and you can believe me that I feel very sorry that the matter which I 

so strongly urged and which the majority of the gentlemen of the 

Government of my country considered just and reasonable, has not 

yet been arranged. 

" I suppose that the delay has probably been on account of the 
many occupations which the President has had in recent weeks in 
preparing his message and the inauguration of the sessions of Con- 
gress, but, as soon as he is able to straighten out matters a little, he 
will certainly give favorable consideration to the petroleum business. 
" In the present message to Congress which I have the pleasure 
of sending you by this mail, you will find clearly expressed the ill- 
feeling which the President has towards the creation of new foreign 
enterprises in his country (see page 83) and that is the reason of his 
desire to limit as far as possible the existing enterprises, among which 
naturally is your petroleum enterprise. 

" I do not think that Lincoln is justified in supposing that a cable 
from me could induce the President to sign the proposed compromise. 
My views are well known to him and my visioTiary cabled phrases 
could hardly accomplish what I did not secure under most insistent 
and repeated conversations with him. Nevertheless, and solely on 
account of my deference for you, I have written a long letter by this 
mail to the President wherein I more or less repeat what I have per- 
sonally said to him in strong language so often." 

This letter contained the following inclosure : 

" Extract From Message of Alfredo Gonzalez, President of the 

Republic of Costa Rica," Submitted to Congress on 

May 1, 1916. 

"Are Large Foreign Corporations Beneficial to the Countrvf 

" The incentive for attracting foreign capital for the develop- 
ment of the country, for the creation of large enterprises, is by many 
considered as the great remedy for curing the bad economic condi- 



48 

tions from which we are suffering. My opinion is entirely opposed 
thereto. Foreigners bringing intelHgence and energy, who settle 
among us, whether they bring some capital of their own or of others, 
are welcome. Foreigners who, in this way, have come to our shores 
and identified themselves with the natives, have been an important 
factor in the great development ; but to say that our reserve land, that 
the occult wealth in our sub-soil, should be given up, should fall 
into the hands of powerful companies who exploit them by means 
of employees and laborers principally of foreign extraction ; who 
feel like foreigners in a foreign country; who sow no seed here and 
in some cases do not even attempt to learn our language ; who in 
their offices in their dealings with the Costa Rican public use a 
foreign language and send their products out of the country to pay 
dividends and who in this way take from our soil a product entirely 
lost to the country — that these be a blessing to Costa Rica I abso- 
lutely deny. 

" We constantly hear the cry that immigration should be fos- 
tered. This would mean that the public of Costa Rica is not capable 
of carrying out its own exploitation. If this were true, it would not 
be necessary to look up foreign capitalists to develop our country, 
nor would it be wise because, by so doing, it would increase the 
scarcity of labor. 

" On the other hand, we hear complaints that there is no work, 
that there is misery ; that the wages paid are so low that they do not 
even give a tolerably decent living to the laborer. If this is true, 
it shows that the population of Costa Rica is rapidly increasing and, 
therefore, requires expansion, and, in that case, it proves clearly 
that we should not give up the little reserve land that we still have." 

The situation was difficult and an acute crisis seemed to have been 
reached. It appeared that the good offices of our Government alone could 
save the acquired rights. But how induce the State Department to aid a 
"concession hunter?" Our American Minister in Costa Rica, Major Hale, 
a civil war veteran, was certainly favorably disposed and active and would 
have aided very ably and effectively with his good offices, had he received 
the necessary instructions from Washington; but nothing came and he 
was powerless. Finally, briefs on the situation were presented to the State 
Department with a formal request for assistance, on May 26 and June 7, 
1916, and Herbert Noble, a New York lawyer, wrote the author as follows : 

" Enclosed please find copy of a brief which we are filing with 
the State Department, and a copy of my letter of transmittal to Mr. 
Polk. 



49 

" From this you will observe that I have discussed this whole 
matter fully with Mr. Polk and Mr. Wright, and, upon the facts 
stated by me to them (the same as the facts set out in the brief), 
they promised that they would instruct Mr. Hale to make an investi- 
gation, and that, if he found that what Dr. Greulich said was true, 
to at once make suitable representations to the Costa Rican Gov- 
ernment to protect Greulich in his rights and to report to the State 
Department thereafter for further instructions if anything further 
was needed * * * 

" You realize without my telling you that the Department as at 
present constituted takes everything with respect to American rights 
in Latin America with reserve." 

Nothing came of it, however, as merely perfunctory attention was 
paid to the matter by the State Department, and the Gonzalez Government 
was permitted to continue its intrigues. The Costa Rican Congress, with 
its supposed Administration majority, convened, and the President was 
confronted with a new problem. The petroleum concession — his own 
initiative with his owai signature affixed — was pending and had to be sub- 
mitted to the Legislature for approval. He did not hesitate to send the 
concession to Congress because he felt sure that he held his deputies in 
sufficient control for defeating the measure. Therefore he went so far 
as to send a message of recommendation : " Study it carefully and approve 
it wuch such concessions and explanations as you may deem wise." 

At about the same time, other competitive oil interests appeared on the 
scene. They all claimed to be American concerns, and there is no doubt that 
there were, among them, some of the largest and best known. One firm 
of New York stockbrokers, however, was acting for European interests. 
It was represented by Manuel Dieguez, a prominent Guatemalan attorney* 
of pronounced anti-American tendencies who was closely identified with 
Alfonso Altschul, the German Krupp representative. It developed that 
Dieguez was the paid counsellor of Gonzalez, retained to attack the writer's 
interests and a member of the Executive's germanophile entourage. 

The brokerage firm mentioned soon revealed itself as Gonzalez' recog- 
nized favorite in the oil tangle. The reason therefor was discovered later 
when it was shown that the New York house was merely the agent and 
cloak for European interests which, fearing the opposition of the Stars and 
Stripes, did not dare to show their face. A letter from a gentleman in 
London, acting for the European principals, to one of their representatives 
in Costa Rica, contains the following interesting passages: 

" * * * j^W [^ aii^ ag f^j. ^g letters go, the impression is that 
the matter should have been commenced. The premature sending of 
the attorney was due to the cable in which you asked that he be 



50 



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Vt- Kduardo Url'^- I; ;• 
s : San ..'.o^e 

gduttnJpj-f ftoclbi a><>r xn cii; 

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51 



A LETTER REVEALING THE BRITISH PLAN TO SECURE 
CENTRAL AMERICAN OIL FIELDS. 

To evade the restrictive effect of the Monroe Doctrine, strong British 
interests were acting under the cloak of a respectable New York stock 
brokerage concern. The preceding is a page of one of the letters exchanged 
between London and Costa Rica, wherein the European identity of the prin- 
cipals is shown. The American stock brokers are referred to as " American 
Agents " and the description is given of how the contract was drafted and 
perfected in London and sent to these " American Agents." Refei'ence is 
also made to the necessity of depositing large sums of money in a Costa 
Rican bank, because " the interested parties, always skeptical in those coun- 
tries as to the effectiveness of promises of this sort, must be taken to the 
bank to feel the money, and this is vital for success." 

During President Gonzalez' fight against the American oil grant, the 
European interests were represented in Costa Rica by Manuel Dieguez, a 
member of the President's intimate coterie, and his paid advisor. 



52 

sent. You state textually 'The general attorney must be here in 
April.' The American Agents were so informed, and these, in view 
of the difficulties of traffic, passports, etc.,' made haste in sending 
him. So much the better, if his presence there has been useful to 
you for the preliminaries. On the other hand, everybody here was 
under the impression that you would only ask for the attorney when 
the business was accepted and the aid of sufficient elements for its 
approval assured * * * 

" He himself confirms your opinion that there would be strong 
opposition on the part of others. From the date of his long letters 
until now, we have your cables announcing that the contract was 
signed with the Executive and would soon go to Congress * * * 

" I wish you had indicated the discrepancies between the copy 
of the contract which you received and the one which the attorney 
took with him. The original document zuas written at my home on 
my machine. I dictated it to him from the notes I had taken for 
some time, to a typist which they had sent from the office. I sent 
you one of the duplicates of that first document. In sending the 
other one to Nezv York, we noticed that it contained errors and it 
was copied again, so as to send it in clean shape * * * 

" At all events, / advised you, as well as the agents in New 
York, that this document was, in one form or another, a draft of the 
general plan of the business subject to rectifications * * * i 
trusted Dr. Dieguez for this work. * * * 

" Your exigency of depositing the money there I explained here 
absolutely on the same terms as you in your letter: ' Uribe,' 
I said, ' m,ust be able to take the interested parties, always skeptical 
in those countries as to the effectiveness of pro'mises of this sort, 
to the bank and make them 'feel' the money; and this is vital for 
success." 

" They immediately took steps to obtain the required authoriza- 
tion and the bank cabled its manager there to find out whether it 
had the complete sum at its disposal, sending for the present the 
amount of the Government deposit. * * * 

" The Government is going to receive three deposits of five thou- 
sand pounds each as a guarantee of the investment of twenty thou- 
sand pounds, fifty thousand pounds and one hundred thousand pounds 
respectively in the three periods of two, three and seven years in 
exploration and in exploitation. These sums so guaranteed con- 
stitute automatic guarantees that during these twelve years the con- 
tract is entirely in favor of the Government. If the twenty thousand 
pounds are not invested, the five thousand pounds are lost. And 
once these twenty thousand pounds are invested, the one most eager to 



53 

make the enterprise successful is the capitalist, who will then have 
already invested a total of about one hundred thousand pounds. 

" You have said nothing more about Nicaragua. This matter, 
far from being rejected, was to be submitted and I was going to 
submit it at the first opportune moment in view of its impor- 
tance. * * * 

"/ do not know what you mean by 'possible economies based 
upon your local requirements to raise funds for payments ' and I 
do not see how you can obtain such funds zvithout the certainty of 
getting the contract. You certainly should not use your credit and 
resources for such a purpose. If there is a contract, those who 
should pay the money will pay it. If there is none, there should 
be no problem of payments. As far as you are concerned, if there 
is a contract they promise here that they will send you very shortly 
the sum you ask for, as an advance on the total sum, and I see no 
difficulty in that respect. 

" The question of shares, regarding which I wrote you various 
times, is different, and I, knowing the matter, insist thereupon. I 
have not handled the matter from its beginning for nothing 
and I am not talking through my hat. In your hands are the 
reasons for changing the agreement with detriment to your personal 
interests." 

The above extracts contain an interesting mathematical problem re- 
quiring algebraic elucidation, viz., look for quantity " X." Five thousand 
pounds were to be deposited with the Government as a guarantee. Twenty 
thousand pounds were to be spent within two years. Hence, total invest- 
ment after two years twenty-five thousand. But " once twenty thousand 
are invested, the capitalist will have then already invested a total of about 
one hundred thousand." Difference seventy-five thousand pounds or three 
hundred and seventy-five thousand dollars, or quantity " X " looked for. 
Where? The reader may guess. 

It is important to note that the same European interests were going 
after the Nicaragua petroleum. Why, of course! The Monroe Doctrine 
should not be an obstacle. Let the Americans get an oil base along the 
proposed canal ? Never ! 

To make a long story short. Congress was baffled by the tangle 
resulting from the presentation of these various propositions and, especially, 
by the peculiar urging on the President's part that Congress reject the 
American concession and favor that of the stockbrokers mentioned. Gonzalez 
was thereupon requested by the Legislature to appear before it and explain. 
Instead he sent the Minister of Public Works. The session was public and 
the Minister dared not commit himself in recommending the rejection of 



54 

a contract that the President and he had worked out and signed jointly. 
He had forcibly to stand by it and, as a matter of fact, did make a luke- 
warm sort of a defense. 

To determine the issue, Congress finally requested the Government to 
have all of the competitors present their offers in writing within a reason- 
able length of time, the American group to be given an opportunity of bid- 
ding against them. This was done and, as a result, the writer was forced 
to materially increase the royalties payable to the State and add a great 
many advantages to the latter which had not been anticipated. 

During this whole period the press had commented upon the situation 
very prominently. A strong popular sentiment had arisen against Gon- 
zalez' mysterious stand. Costa Ricans have always prided themselves of 
their sincerity, honesty and fair play in dealings, especially with foreigners. 
There had never been a diplomatic claim against the country, and the word 
of their Executive had always been considered as final and binding. Gon- 
zalez was deliberately destroying this noble tradition and the thinking and 
leading elements in the country rebelled at the thought. " El Imparcial," 
the pro-German Government organ, took up the President's side ; the pro- 
Ally independent dailies, " La Informacion " and " La Prensa Libre," and 
the comic weekly " La Linterna " defended the writer's cause. Between 
half a million and a million words were devoted to the issue, which shows 
the importance it was given. This, and the fact that over a thousand 
Costa Ricans had their oil lands under lease to Gonzalez' victim-to-be, prob- 
ably accounts for the fact that the President's majority in Congress was 
gradually slipping away from him. Finally, on August 12, 1916, Don 
Alfredo met his Waterloo, the American concession being approved by a 
vote of twenty-six against fifteen. Even the pro-German paper had to admit 
the finality of the American victory and announced in large headlines : 

" The Pinto-Greulich contract for the exploitation of oil in 
Costa Rica was definitely approved yesterday." 

This should logically have ended the matter, but the Kaiser's troops 
were still victorious on all fronts — and the unexpected happened. President 
Gonzalez proceeded to sustain a novel constitutional theory worked out by 
statesman Dieguez. 

" The presidential functions are dual," he alleged, " that of 
' President Administrator ' and that of ' President Co-Legislator.' 
When I signed the Greulich contract it was as ' President Adminis- 
trator.' Now I have the right to veto my own signature as ' Presi- 
dent Co-Legislator ! ' " 

And the amazing part of it was that he had the courage to ao it. 
However, this new doctrine was so absurd and repulsive to the sterling 



honesty of Costa Ricans that an ahnost unanimous feehng arose against such 
cheapening of the presidential word and signature. So strong was this 
sentiment that Gonzalez' own Minister of Public Works, whose signature 
was also affixed to the concession, refused to sign the veto. Under the 
Costa Rican constitution a veto being null and void unless the respective 
Minister countersigns it, Congress held that this veto could produce no 
legal effect. An intense juridic controversy resulted. The legal elite 
described before was once more consulted and again the prominent jurists 
comprising it, unanimously proclaimed the veto to be illegal and the con- 
cession as an irrevocable and valid law of the country. ^■ 
So intense had public sentiment against the Executive then become 
that he thought of resigning. His German coterie, however, opposed this 
step and he had to hold out, considering at the same time the advisability 
of proclaiming himself Dictator. Were the Huns not making daily progress 
toward Paris, Petrograd and Venice? 

Castro Quesada, Gonzalez' Minister in Washington, wrote the Presi- 
dent from Allenhurst, New Jersey, on August 25, 1916, a letter containing 
the following interesting comment and advice on the subject: 

" * * * Nicholas says * * * that you are so downcast, 
so tired, so sick of all those miseries that you are thinking of aban- 
doning the Presidency, if the matter fails * * * Pelico (nick- 
name for Federico Tinoco, then Minister of War) writes me in a 
tone of despair and sadness, which really worries me because it is 
so unusual and so foreign to his energetic and aggressive character. 
He says nothing concrete, but simply that everything seems so black 
to him, so ugly, that he feels like running away. 

" Anyhow, write me, telling me whether those rumors are true 
and whether your depression is so great that you intend to resign. 
This worries me more than anything else because it would mean the 
definite delivery of the country to the shamelessness of the * Ring ' 
(this is a nickname for the political party of former President Cleto 
Gonzalez and other prominent intellectuals). 

" You may perhaps say that sad experience authorizes you to 
qualify our group as no less incapable and disastrous than the other 
groups which have governed us, and that, if you did take that step, 
you would have every reason for so doing. But you must not forget 
that our group, of as ill repute as it may be, is our group. Anyhow, 
inasmuch as it is all one trash, it is much better that our group rather 
than the others divide the bacon. * * * " 

On September 19, 1916, he wrote the President as follows : 

" * * ^'- The newspapers received this morning gave me an 
accurate idea of the conflict between Maximo (President of Con- 
gress) and yourself regarding the Greulich contract. * * * 



56 

" * * * The cable which Valentine showed me said that 
Congress had declared that your veto to the contract was void, it 
being contrary to Article 108 of the Constitution and that, therefore, 
the contract is already a law of the Republic. 

" Moreover, a person, whose name I cannot give you because 
he spoke in strict confidence, showed me a cable saying more or 
less, ' * * * All the ex-presidents declare emphatically that they 
sustain Maximo Fernandes (President of Congress), that thirty-two 
deputies are with him unconditionally, as well as the Republican 
party. * * * ' 

" You can imagine the impression this produced upon me. 
* * * Of course, whilst I am in this post I can take no part in 
politics, especially not against the Government. * * * 

" * * * I now want to give you my impression concerning 
the business. 

" If the majority of Congress deem the attitude of Don Maximo 
(President of Congress) correct, and such respectable jurists as the 
former presidents consider it likewise, you should, in my opinion, 
give in. Otherwise it zvoiild mean a dictatorship ztnth all its lament- 
able consequences, aggravated in this case by an international 
problem, inasmuch as Americans are concerned whom Congress and 
the thinking part of the country consider as holding legally acquired 
rights. 

" It was an earthquake, which did us much harm and, therefore, 
obliges us to preserve and improve what remains to us. Let the 
disaster at least be useful to us, so that on other occasions we may 
proceed with more caution and discretion. 

" Yes, Alfredo, this matter was lost through the very bad manner 
in which it was handled. You were stubborn in refusing to recognize 
the strong basis protecting Greulich and refused to accept the com- 
promise which reduced the damage to one-fifth. This is not 
^jl_ * >H * Then, in spite of the fact that you knew that your 
majority in Congress was pasted with saliva, when the moment 
arrived for you to speak frankly, to employ the moral authority, 
which the Government as such would have exercised over timid and 
vacillating friends, you sent Enrique (The Minister of Public Works) 
to Congress to say nothing — the diagnosis of the doctors' of the 
King who was crazy, the advice of Toledo to his son : ' Marry ; do 
not marry.' 

" Then happened what did happen. You had to lift the cathedral 
alone, with wonderful courage, but a damned detail of form, im- 
possible to save because other interests entered into the game, tore 
down your titanic effort of the last hour. 



57 

" * * * And now, my dear Alfredo, let us give each other a hug 
to console oiu-selves mutually ; you, on the shock which your patriotic 
sentiments and vanity as man and Governor have received by the 
sending of this unfortunate matter and I — on what I shall tell you 
another time." 

Gonzalez was stubborn, however, and influenced by his pro-German 
advisors. Give in to Americans ? Never ! But his Washington Minister 
was of a dififerent opinion and wrote him on October 1st, 1916, urging 
him again to bow down : 

" From the newspapers which I received last week, I see that 
some people are very desirous for a friendly settlement and that 
would really be the desideratum. With a little trickery it would, 
perhaps, be possible to have Greulich accept the compromise which 
I left in good shape, and whereby he would only receive Talamanca. 
To attain this end, it would be necessary to secure, or make the hliiff 
of having secured, enough deputies who, as Congress, might declare 
that your veto is valid. But the legal question would then come up 
before the Courts. It is precisely before that discussion would come 
up that I think the compromise would fit in. 

" I think that, otherwise, the thing to be done is what I stated 
in my foregoing letter: Give in on the petroleum in exchange for 
a formal promise to back the tax reforms. * * * 

" I, of course, would remain with the Government or, rather, 
follow the Government, provided the latter remains within constitu- 
tional bounds ; because the only thing which would make me separate 
therefrom would be a dictatorship if that should unfortunately 
happen. * * * " 

There was only one road open for Gonzalez to win the issue, and that 
was to proclaim himself Dictator. This idea had probably been in the 
President's mind, judging from Castro Quesada's letters. However, the 
insistance of his Washington Minister and friend finally seemed to have 
the desired effect and, on October 29th, 1916, there appeared in Official 
Gazette No. 101, a decree calling Congress into special session to pass, 
among other things, upon the 

" Veto of the Executive power to the law approving the Pinto- 
Greulich contract." 

In his message to Congress, as per Official Gazette No. 44, the President 
said: 

" If, contrary to my hope, Congress determines to reject this 
initiative and constitutionally ratifies decree No. 51, I shall have it 
executed in respectful obedience to its resolutions." 



58 



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r-. • ./ 

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-^-t-iitifo ?i-t-rV--«-i^ i.*_..- Af'j-tx-* 



59 



PRESIDENT GONZALEZ IS ADVISED BY HIS WASHINGTON 

MINISTER TO ABSTAIN FROM BECOMING A DICTATOR 

AND TO RESPECT THE LEGITIMATE RIGHTS OF 

THE AMERICAN OIL GROUP. 

From confidential correspondence between Manuel Castro Quesada, 
Gonzalez' Minister Plenipotentiary in Washington, and the President: 

" his childishness I thought it was my duty to tell you, I now want 
to give you my impressions concerning the business. 

" If the majority of Congress deem the attitude of Don Maximo 
correct and such respectable jurists as the former Presidents consider 
it likewise, you should, in my opinion, give in. Otherwise it would 
be the dictatorship with all its lamentable consequences aggravated 
in this case by an international problem, inasmuch as Americans are 
concerned whom Congress and the thinking part of the country con- 
sider as holding legally acquired rights. 

" That the interests of the country are prejudiced if the Greulich 
contract remains in force? What are we going to do about it; let 
them be prejudiced there being no other remedy. Let us try to 
improve them in other ways and not think any more about it. It was 
an earthquake which did us much harm and, therefore, obliges us to 
preserve and improve what remains to us. Let the disaster at least 
be useful to us, so that on another occasion we may proceed with 
more caution and discretion. 

" Yes, Alfredo ; this matter was lost through the very bad manner 
in which it was handled ; you " * * * 

The above is part of a handwritten letter from AUenhurst, New Jersey, 
summer residence of the Legation, on September 19, 1916, consisting of six 
pages. It will be seen therefrom that Gonzalez' own clique considered the 
American group as the legitimate owner of the grant with the approval of 
the ex-presidents, prominent lawyers, the Legislature and the thinking ele- 
ments of Costa Rica. International complications are foreseen, should 
Gonzalez continue his stubborn and peculiar opposition. The above letter 
was written about a month after the President had repudiated his own 
signature. 



60 

By " this initiative " he referred to his veto. " Decree No. 51 " was the 
one legislatively ratifying the Greulich oil concession. 

The so-called A^eto was thereupon exhaustively discussed, referred to 
a special committee and rejected. So strong was the feeling of all parties 
on the subject that out of the forty-three deputies constituting Congress, 
only four voted in the President's favor. 

That ended the fight and, without further opposition on Gonzalez' part, 
Official Gazette No. 113, of November 12th, 1916, published the American 
grant with the following resolution : 

" The Constitutional Congress of the Republic of Costa Rica, 
in its session of November 10th, 1916, decreed by more than the ma- 
jority of two-thirds required by the Political Constitution to cause 
to be promulgated in the Gazette, Official Daily, the foreging decree 
for its effects as Law of the Republic." 

The writer was in New York at the time. Upon receiving the cable 
announcing that the Legislature had decided in his group's favor, it was 
apparent to him that all troubles were over and that, as a good sportsman, 
the time was ripe for handshaking all around, with friends and enemies 
alike. Consequently, he sent the following cable to his representative in 
Costa Rica, on November 11th, 1916: 

" Last and sincere congratulations. Please express to President 
of Costa Rica my cordial appreciation, friendly regards and, with my 
best wishes, my trust that the enterprise will redound to the greatest 
benefit of your dear and progressive country." 

Gonzalez replied to that representative, thanking the author and return- 
ing equally cordial wishes. 

On December 23d, 1916, the writer entered into a contract with impor- 
tant American oil interests for the exploitation of the enterprise on a large 
scale. Work was commenced at once on the development of the properties 
under the concession ; very large investments were made and, at this writing, 
drilling operations in various places are bei4ig carried on day and night. 

The author did not return to Costa Rica for some months, devoting his 
time to the organization of the work. His surprise was great when, on Jan- 
uary 29th, 1917, he received a cable announcing that President Gonzalez had 
been overthrown and Federico Tinoco, the Minister of War, assumed the 
Provisional Presidency. 

This news was unwelcome because Mr. Tinoco had never been con- 
sidered a friend of the oil enterprise. Therefore a cable was sent at once 
to the Costa Rica representative, instructing him to establish in the writer's 
name friendly relations with the new Government. There was no reason to 
fear that Tinoco, or any other new Government, could in any way interfere 



61 

with the concession, which was not only binding on the Government but on 
the State itself. However, the recently acquired experience in fighting the 
opposition of a Central American Government did not create a particularly 
strong desire for entering into a new contest of the same sort. Great relief 
was felt, therefore, when the new President replied to the overtures in an 
equally friendly spirit. 

Time went on. The author visited Costa Rica and other Latin-Amer- 
ican countries, devoting his whole energy to the acquisition of new oil fields, 
their organization and development. Little of his time was spent in Costa 
Rica and he certainly had no interest whatever in its political situation. One 
occasion should be excepted, though, and that was immediately after the 
United States had declared war on Germany, when he took it upon himself 
to suggest by cable to the Tinoco Government that it, too, declare war on the 
Hun. Some of the Latin-American States had done so. Costa Rica was 
vacillating. A strong current of popular feeling was for it, but the German 
elements were intriguing against it and Tinoco was endeavoring to counter- 
act their schemes in order to gain wide support for the war decree. Presi- 
dent Wilson's refusal to recognize the Tinoco Government was being keenly 
felt by foreigners and natives alike. In the belief that the United States 
could not very well refuse to have a friendly feeling for a Government that 
had frankly allied itself with ours in fighting a common enemy, the writer 
sent the following cable to a friend of his and of President Tinoco in Costa 
Rica on April 11th, 1917: 

" I suggest to you that Costa Rica follow the attitude of Panama 
and Cuba by declaring immediate war on Germany, because I know 
positively that Costa Rica is being considered as the principal center 
of German conspiracy. With a full knowledge of the matter I con- 
sider the recognition of Tinoco impossible if he does not take rapid 
and decisive action." 

Relations with Germany were broken off a few months later and war 
declared not long thereafter. 



62 






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63 



"A LITTLE TRICKERY" IS PROPOSED TO DEPRIVE AMERICAN 
OIL GROUP OF ITS RIGHTS. 

(From Confidential Correspondence between Manuel Castro Quesada, 
Minister Plenipotentiary in Washington, and President Gonzalez.) 

"Washington, October 1, 1916. 
" My Dear Alfredo : 

" I have been greatly worried over the difficulties in which you 
have been placed by the impulsive action of Don Maxim.o. If the 
matter reduced itself to his separation alone, it would not matter ; but 
what I fear is that the Congressmen accompanying him are suffi- 
ciently numerous to leave you without a majority, that is to say, 
drown your projects. 

" From the newspapers which I received last week, I see that 
some people are very desirous for a friendly settlement and that 
would really be the desideratum. With a little trickery it would per- 
haps be possible to have Greulich accept the compromise. which I left 
in good shape and whereby he would only receive Talamanca. To 
attain that end, it would be necessary to secure or make the bluff of 
having secured enough Congressmen who, as Congress, may declare 
that your veto is valid. But the legal question would then come up 
before the " * * * 

The above letter was written after the time the American oil grant 
had been approved by the Legislature and vetoed by the President, despite 
his previously affixed signature. Ganzalez and his Washington Minister 
were sure that Congress would reject the veto. Bluff and trickery were 
therefore proposed in an attempt to make the American interests feel 
insecure. 



64 





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65 



ALFRED GONZALEZ, OUSTED, ENLISTS PRESIDENT 
WILSON'S AID. 

How Gonzalez Touched Our President's Sentimental Chord and 

Obtained His Support. 

The overthrow of Gonzalez was a simple affair. He having declared his 
intention to retain the presidency for another term, Tinoco insisted that 
the unruly ruler keep his word and abstain from forcing himself upon the 
unwilling people. In reply, the President requested Tinoco, then Minister 
of War, to resign. Being in charge of the armed forces of the country, 
numbering about 500 men, Tinoco informed Gonzalez that the latter's use- 
fulness was at an end. The President knew that his minister meant business 
and speedily transferred his residence to the American Legation, where, on 
the plea that his life was in danger, he received asylum. 

There was no bloodshed and hardly any excitement. The peaceful 
coup d' etat had occurred in the morning. At noon, the capital was 
befiagged ; the cafes were wide open ; bands played merrily and a celebration 
took place paralleled only on Armistice Day. 

Tinoco assumed the provisional presidency but, faithful to his guardian- 
ship over the 1914 pacts between the combined political parties, at once 
called the ex-Presidents and other prominent men into consultation. After 
the rejoicing over the fall of the unpopular would-be despot had subsided, 
it was found that general political harmony prevailed. Everybody seemed 
to be satisfied with the new provisional regime, which became permanent 
a few months later as the result of elections under the direct supervision 
of the former presidents. 

Gonzalez was permitted to leave for Washington in company with his 
friend Castro Quesada, who had acted as his Minister to the United States. 
Upon their arrival at our national capital, the unforeseen happened. Presi- 
d^it Wilson received both men with official honors, Gonzalez being given 
an opportunity to empty his heart to our Chief Magistrate. 

" This, Mr. President," he is reported as having pleaded, " is a 
recurrence of a typical Central American revolution. I trusted my 
War Minister, Tinoco, whom I considered a friend and into whose 
hand I had, therefore, delivered my armed forces. Impelled by a 
crazy lust for power, he betrayed me outrageously and has now the 
country under his control as a tyrant. Unless you help me to over- 
throw his regime, my country will face ruin. My administration 
was highly successful, as I tried in a modest way to emulate your 
great example in economic and state matters. Help me !" 



6b 

President Wilson seems to have been deeply impressed by the deposed 
ruler's apparent charm and frankness and, shortly after his visit, the State 
Department made the following announcement : 

" In order that citizens of the United States may have definite 
information as to the position of this Government in regard to any 
financial aid which they may give to, or any business transactions 
which they may have with, those persons who overthrew the con- 
stitutional Government of Costa Rica by an act of armed rebellion, 
the Government of the United States desires to advise them that 
it will not consider any claims which may in the future arise from 
such dealings as worthy of its diplomatic support." 

That was in February, 1917, only a few weeks after the coup d' etat, 
when there had hardly been time for our Government, with its slow- 
working routine, to thoroughly investigate. It is therefore safe to assume 
that President Wilson acted upon the impulse of the moment, solely with 
Gonzalez' own presentation of the case and a mere general ofificial report 
before him. It stands to reason that he was unacquainted with the pro- 
German nature of Don Alfredo's administration, although the files of our 
various government departments must have contained the information given 
in this report. We were then on the verge of declaring war on the Hun 
and, under the circumstances, the ousting of a dangerous pro-German 
government close to the Panama Canal, with the general applause of the 
country affected, could not be classed as an infringement upon our Presi- 
dent's idealistic policy of stamping out revolutions in Latin America. This 
change of government would fit much more accurately into the doctrine 
of : "a government of the people, for the people," or, as Wilson terms it, 
" self determination." 

Gonzalez and his clique have made the open claim that President 
Wilson promised to oust Tinoco, by force if necessary, and permit the 
deposed faction to regain the control of Costa Rica. Our Government's 
Costa Rican policy since the Gonzalez overthrow, intercepted correspond- 
ence and subsequent events apparently corroborate this version. The Ger- 
man agent, Kiimpel, for instance, was so informed, in a letter which 
Gonzalez wrote him after his interview at the White House. In an effort 
to exterminate Hun activities from his country. Provisional President 
Tinoco had forced " El Imparcial," the German propaganda paper to sus- 
pend its publication, and arrested numerous Huns, among them Kiimpel. 
Upon being examined (in the presence of the American Vice-Consul, Mr. 
Fitzpatrick), this Teuton agent testified: 

" Judge — Kindly tell me why you have said to some of your 
workmen and to some people in Grecia that Alfredo Gonzalez would 
soon return to power? 

" Witness — For no reason, because I never said anything like it. 



67 

Whoever says so is a liar, and whoever pays any attention to such 
tales in order to trouble quiet people is a fool. How could I pos- 
sibly have made such a statement! / am morally certain that, if 
Alfredo Consoles so desired, he would now be President of Costa 
Rica, because Mr. Wilson, of whoin he never asked such a thing as 
is being said here, called him especially for the purpose of offering 
him his restitution to pozver by force. Although I have no details, 
the intimacy and constant communication of ideas between us, 
which we have had for many, many years, permits me to under- 
stand his motives which cannot be other than a legitimate personal 
pride — which prevents him from converting himself into a lackey 
of the Department of State — and his patriotism as a Costa Rican 
who does not want to see his country in the sad position of Cuba, 
Panama and Nicaragua. And it would only be with the backing of 
American arms that a revolution in this country could hope to be 
successful, because there seems to be an entire lack of men capable 
of exposing their hide for their convictions. 

" Judge — The foregoing statements which you have made with 
reference to the fact that Mr. Wilson has offered to replace Mr. 
Alfredo Gonzalez in power, do you know them from your own 
knowledge or from hearsay? 

" Witness — I know them from my own knowledge, through a 
personal letter from Alfredo Gonzalez. 

" The examination is suspended here — witness adding that he 
has received two letters from Alfredo Gonzalez, which fact he desires 
to state so that everything may be cleared at once and nothing remain 
for possible misunderstanding and consequent future trouble. The 
two letters were received by him directly by mail from the United 
States — one sent from Philadelphia, the other from another interior 
town" (from official record). 

Gonzalez felt certain that the United States Government would back 
his endeavors to oust the Tinoco regime. This is shown in detective 
reports made during the years 1917 and 1918. The following extracts there- 
from are interesting: 

"April 8, 1917. The main subject (Gonzalez) was taken in 
hand on this day. Together with several companions he left the 
house about 9 :00 a. m., carrying a small valise marked AGG-TH. To 
all appearances this seemed to be a precious package for him, because 
at no time while we were with him did he leave it out of his sight 
nor allow anyone to touch it. Accompanied by a man, to all appear- 
ances German ; tall, heavy set, weighing about 200 pounds, with 
ruddy complexion, and another man rather heavy set and under- 
sized. 



"68 

" The taller man (German) bought a German paper, taking the 
Broadway car to 59th Street and then the crosstown car to Madison 
avenue, where he entered the building on the northwest corner called 
the ' Hoffman Arms,' where he remained some time, and after com- 
ing out returned to 71st street * * * 

"April 9, 1917 * * * About 11 a. m. he left the house 
again with the same German. Both in .most earnest conversation. 
The German left him at the 22d Street Subway station, one of our 
men being with him ah the time. 

" The principal was met by (J. Montero, former Consul General 
of Costa Rica), a short, thick set man, who was evidently of the 
Latin race, wearing gold eye-glasses with whom he returned to his 
room. From our house we could see that they were in close con- 
ference for several hours. 

" A short heavy set man, somewhat blondish and pock-marked, 
entered the house about an hour after the return of the foregoing, 
and was immediately taken to their rooms. He seemed to be a very 
quick talker and gesticulator. He was not a Latin and gave every 
evidence of being German * * * 

" April 10, 1917. At 9 a. m. our principal, together with the 
German, left the house and went to the same restaurant for break- 
fast, where they remained for about an hour. On coming out of the 
restaurant they separated, the German again taking the Subway, one 
of our men being with him all the time. He then got out at Battery 
Place and entered No. 11 Broadway, and the last we saw of him he 
was going into the Steamship Line's office. 

" The principal (Gonzalez) on returning to his house was met 
again in the street by the man with the gold eye-glasses (Montero). 
They entered the house, were in conversation for half an hour, when 
the younger man left precipitately. 

" Considering him as an important element, we left our assist- 
ants to guard the house, and took this man in hand ourselves. We 
followed him into the Subway. He again got out at Rector Street; 
we kept close to him until he entered No. 2 Rector street. We 
went up in the elevator with him to the 11th floor, where he entered 
the room with the sign 'Consulate General of Costa Rica.' We 
noticed in the inner office there was quite a crowd of young Latins, 
numbering between 15 and 18, while out in the hall there were 
half a dozen waiting to enter. There was a woman in the inner 
room, evidently connected with the office. 

" Realizing we had found something important, we immedi- 
ately telephoned for three more assistants. In the meanwhile we 
entered the office, asked for the Consul General himself, and the 
same gentleman with the gold eye-glasses came out and introduced 



69 

himself as Mr. Montero, claiming he was the Consul General, and 
asked our business. We presented our card as the representative of 
a newspaper organization desiring information on the status of his 
country, requesting him to give us such data as he cared to give and 
that we wished to publish in our papers whatever might be of in- 
terest. ^ ^^:Ci>^ 

" As we represented ourselves as newspaper men, he immedi- 
ately became interested by telling us that he had been in the news- 
paper business himself, having been the representative of the New 
York Herald in Costa Rica for some time. 

" In our conversation with him he was very frank in saying that 
a change in government had taken place in Costa Rica, and that 
he still retained his post as Consul General, but that he had to be 
very discreet because he was a friend of the Ex-President Alfredo 
Gonzalez, who is now in New York living on West 71st Street. He 
was very frank in telling us that he could not compromise himself by 
making any statement for publication. Nevertheless, he was em- 
phatic in his statement that the Ex-President had a large following 
and was taking active steps against the present government. We at 
once made up our mind that he was not playing true to his official 
position, and therefore we are holding him in reserve for future 
use. 

" He gave us a card of introduction to the Ex-President, telling 
us that he had important documents from Washington which he 
thought we could get from him for newspaper usage. 

" We then left him with the understanding that we would come 
together again * * * 

"April 11, 1917. We then called on Gonzalez and presented 
the introduction given us by Mr. Montero. Were received pleas- 
antly. We found him a most affable man and ready to talk on matters 
pertaining to his country. He was very bitter in his language about 
Tinoco and his associates and the traitorism that they had played 
on him. He was also most bitter at all Americans and American 
interests^ denouncing them, in every way as ahvays having been ene- 
mies to his government, and most markedly showing that if he 
returned to power they would find no quarters with his government. 

" About a half hour after beginning our conversation with the 
above party, the same German entered the room without knocking, 
and, on receiving a sign from the principal that he was busy, he im- 
mediately withdrew. 

"He gave us to understand by his interviews with the State 
Department that the present government would never be recognized 
and that Washington zvould do everything possible to avoid the prog- 



70 

ress of the Government. He told us that business was at six's and 
seven's in Costa Rica and going backward fast ; that now that he 
was out he had no intention of again looking for the presidency for 
himself, but that he would use every influence for the present govern- 
ment to be overthrown and an acceptable government established. 

" He stated that he was making preparations to return to Costa 
Rica at an early date with numerous friends and that he did not 
consider it necessary to use force of arms, but that through his many 
friendships and connections he would be able to proselyte the country 
to such an extent that they would realize the traitorism of the Tinoco 
government and would, among themselves and with his co-opera- 
tion, cause a counter-revolution that would eliminate Tinoco and 
his entire staff. He handed us a paper (annex A) copy of which is 
hereto attached, written in English, which seems to be a diatribe of 
bitter reminiscences. 

" In our presence he wrote an article in Spanish, translation of 
which is hereto attached (annex B), which seems to be abusive to 
the existing Government, he specifically referred to some clippings 
wherein names of prominent Americans are mentioned and referred 
to them as gamblers and speculators of a most obnoxious class to 
the country * * * 

"April 11, 1917. * * * The principal, in company with a 
young man carrying a camera, came out. The young man we would 
judge to be of a clerical position and also of Latin descent. They 
boarded the Subway at 77th Street and left at Wall Street, where 
they separated. The principal (Gonzalez) walked down to Front 
street. No. 80, where he entered the Costa Rican Trading Company's 
offices, and about two o'clock came out with three men, whom we had 
never seen before. 

" The first was a young man about 5 ft. tall (Eduardo Bonilla) ; 
The second, a very large man, about 5 ft. 11, smooth shaven, heavy 
built (W. H. Field), and the other man about 5 ft. 6j/^, 39 years 
of age, heavy built, about 180 pounds, smooth shaven (Edmundo 
Montealegre). They all went to a restaurant at 130 Water Street 
and remained there until 2.25 p. m., and the principal, with two of 
the foregoing, left the restaurant and returned to 80 Front Street. 

"April 11, 1917. We met the principal at the Ansonia Hotel 
at 6.30 p. m., where we all had a rather ample dinner. * * * 

" During our conversation we covered many points, wherein he 
showed that he is practically a maniac on the one subject of the 
elimination of Tinoco. He told us many of his plans for re-establish- 
ing himself in Costa Rica, insisting that he had strength enough to 
proselyte, and did not require arms or revolutionary methods to 



71 

gain this point. He felt absolutely sure that the United States Gov- 
ernment was so firmly set against Tinoco that he could have its 
fullest co-operation in carrying out his plans. 

" He informed us that his personal friend, Castro Quesada, was 
moving heaven and earth in Washington to get this co-operation, 
and he at least felt absolutely sure that this man was working most 
honestly in his favor and for the culmination of all his plans. We 
gave him a copy of the supposed interview that we were to publish. 
He read same and kept the copy, as he said he wanted to study it 
that night for our subsequent engagement. 

"April 12, 1917. We called on the gentleman (Alfredo Gon- 
zalez) at 10:30 a. m., found him alone and with our interview before 
him. He had made some notations thereon and some changes, but 
all in all he seemed to be very much pleased therewith. 

" I explained to him that on account of voluminous war news 
it might be several days before we could publish this article, and we 
were preparing to take notes for the second article of the serial when 
a man entered the room, about 5 ft. 11 in. tall, weighing about 190 
pounds, dark blondish hair, smooth face, apparently between 32 and 
35 years of age, speaking Spanish fluently (W. H. Field). This man 
gave himself considerable importance and immediately took command. 
" Our principal at once introduced us and gave him our copy 
of the interview. He hardly looked at same before he said in the 
most imperative manner: 

"'Cut this all out; Mr. Gonzalez has no right to give any 
interviews and has no right to appear before the public at all. 
This matter is entirely in the hands of the Department of Justice, 
and although I may be committing an indiscretion in giving you 
this information, the fact is that Mr. Gonzalez and all those con- 
nected with him must keep their mouths shut absolutely until given 
out by the Department, which has all the necessary information for 
carrying out the projects in view.' " 

The foregoing detective report would indicate that the following are 
associated with Gonzalez : 

Costa Rica Trading Company, which is a New York commercial 

concern ; 
Edmundo Montealegre and Eduardo Bonilla, both Costa Ricans 

controlling the concern named ; 
J. Montero, the former Costa Rican Consul General ; 
Manuel Castro Quesada, the former Costa Rican Minister in 

Washington, and 
W. H. Field, who has made himself appear as being connected 

with the New York Division of the Department of Justice. 



72 

Montealegre and Bonilla have personal reasons for being enemies of 
the Tinoco family. Joaquin Tinoco, the President's brother, killed a relative 
of the gentlemen named in a duel. A family feud was the consequence, 
which has become a sort of Sicilian vendetta affair. 

The plan seemed to be for Gonzalez and his associates to finance and 
organize a revolution in New York to oust the Tinoco regime and re-establish 
Gonzalez' friends in power. Everything indicates that the deposed ruler 
and his group were convinced that the State Department and the Depart- 
ment of Justice were looking with favor upon the scheme. 

Some months after the above detective report was filed, a revolution 
broke out in Costa Rica, headed by Rogelio Fernandez Guell, a pro-German 
Spaniard, who had for many years resided as a newspaper editor in Mexico 
City. Gonzalez had called him to Costa Rica upon assuming the presidency, 
and made him part-owner and editor of " El Imparcial," the pro-Hun paper 
already described. The revolt was unsuccessful, Guell and his companions 
being killed by government troops. Their bodies were taken to the capital 
and sumptuous funeral services held, the whole German colony, in ceremo- 
nious attire, marching behind the cortege to the distant cemetery. 

In the meantime, Tinoco had established an orderly Administration 
and resumed diplomatic relations with the following countries : Brazil, 
Argentine, Chile, Peru, Bolivia, Ecuador, Colombia, Venezuela, Mexico, 
Guatemala, Honduras, Salvador, Santo Domingo, Haiti, China, Japan, 
Portugal, Switzerland, Spain, Sweden, Norway, Denmark and the Vatican. 
Great Britain and France maintained friendly relations with him, but 
withheld formal recognition out of respect for the United States. Cuba, 
Panama and Nicaragua were, of course, guided by our Government. 
Nevertheless, when Tinoco declared war on Germany he was hailed by 
Great Britain, France and the other entente nations as a welcome ally 
against the Hun. Even American Ambassador Sharp, in Paris, exchanged 
the usual formal complimentary letters on that occasion with Tinoco's 
Minister to France. 

The failure of the Fernandez Guell revolution did not seem to dis- 
hearten Gonzalez and his satellites, who appeared to have secured fresh 
funds in the United States with which to fight Tinoco and the American 
interests. The inducement offered to those from whom his group tried to 
obtain money for the intended revolution was a share in the oil concession 
discussed in this booklet which an important American corporation is now 
exploiting on a large scale, and against which it was decided that the return- 
ing Gonzalez faction would take arbitrary measures. This is clearly shown 
by later detective reports, of which the following extracts are pertinent: 

" April 5, 1918. * * * I left and went to 2 Rector Street, 
where the office of Montero is located. As I was about to enter his 



11 

office in Room 903, I saw a man whom I recognized as having seen 
before in Room 376, 17 Battery Place, which is the office of a man 
by the name of R. H. Manser. My attention was at once drawn 
to him because at that time I overheard a conversation with Manser 
regarding the purchase of a boat of fast speed for use in Costa Rica. 
* * * He went direct to 80 Front Street, the office of the Costa 
Rica Trading Company. Mr. W. H. Field, whom I know well, 
seemed to be waiting anxiously for him, because he grabbed him at 
once and addressed him as ' Montealegre ' and rushed him to the 
office. I waited some time, and at 6.30 p. m. they came out with 
another man of Spanish appearance, about 55 years of age, with short 
gray moustache. 

"April 6, 1918. At 9.30 a. m. went to 2 Rector Street, took 
elevator to ninth floor, but found Montero had moved to 12th floor, 
Room 1223. When I covered that room I noticed a gathering of 
10 or 12 men, all speaking Spanish. None of them seemed to be of 
importance except one, whom by the description given me I at once 
recognized as Mr. Ellis, a Mexican, whose office is at 35 Nassau 
Street, and who, I had been told, was interested with Montero. I 
followed him to his office, where I left him. * * * 

"April 8, 1918. * * * At 2 p. m. took operator J. L. to 
JVlontero's office with instructions to offer a quantity of rifles. A 
^oung man went inside and returned in a few minutes, saying that 
Mr. Montero was then engaged but he was interested in buying rifles 
and requested that my operator return in a few days with a definite 
offer. He wanted a description of the rifles and all the data to give 
Mr. Montero. He was given a list of the offer and showed quite 
some satisfaction when he read it. 

" April 9, 1918. * * * At 10.30 a. m. went to 35 Nassau 
Street and called on Mr. Ellis on a pretext of having oil lands in 
Texas. He became very much interested and told me he was inter- 
ested in oil lands in Costa Rica, but that there were certain questions 
about them. He told me he had no time to discuss with me then, 
but invited me to luncheon at noon the next day. I left but remained 
^yatching. Mr. Ellis came out at 12.30, went to 32 Nassau Street, 
Room 447, the office of an attorney, W. R. Deuel, lawyer for Manuel 
Lardizabal and Gonzalez. He remained until 2 p. m. and returned 
to his own office. 

" April 10, 1918. * * * Mr. Ellis explained that he had a 
big proposition for oil in Costa Rica, but that the concession was 
held at present by other interests, but that it was not legal and that 
he was connected with Gonzalez, Montero and Deuel, who repre- 
sented them in Washington ; that they zuere arranging a revolution to 



74 

overthrow Tinoco, and had the partial consent of Washington. He 
further told me that two generals in the employ of Tinoco were ready 
to betray him as soon as they got their arms and ammmiition into 
Costa Rica ; that they had these arms and ammunition at Turks Island 
and Mr. Ellis was to contract for a schooner in Mexico to go there 
and carry same to the coast of Costa Rica. 

" Further, that they had two towns, one of 800 men and the 
other of 1,000 men, ready and at the call of those generals. 

" Castro Quesada had gone to Washington with Deuel and made 
arrangements, and Washington had said that it would never recog- 
nize Tinoco, nor would it favor Gonzalez, but that if Gonzalez, Vice 
President (not his father), was put in he would be recognized. 

" That Castro Quesada had left for Panama to make all arrange- 
ments and was waiting only for advices that the second schooner 
had been secured to bring the arms and ammunition from Turks 
Island. 

" Mr. Ellis asked my co-operation and offered me a good par- 
ticipation in the concession for oil lands. 

" Went to 17 Battery Place to see Mr. Manser; I asked whether 
he was there, and a young man called him. I asked him whether he 
was still interested in the purchase of a boat, but he replied that they 
had practically closed a contract for a 50-foot launch, but suggested 
that he would be pleased if I called again in about a week in case 
they may want another one. 

"April 11, 1918. * * * At 11 a. m. went to 35 Nassau 
Street, where a young lady gave me a message that Mr. Ellis would 
not be there until two o'clock. I 'phoned at that hour and he told 
me that he had a message from Montero saying that things were 
going satisfactorily and would see him later in the afternoon. 

" I called on Mr. Ellis at 3.30 p. m., and he said that after his 
interview with Montero he would introduce me. As Montero knows 
me I had to avoid the introduction by telling him I had to leave town 
and would return to-morrow. 

" I watched the office, and at 5 p. m. Montero, Gonzalez and 
two others entered and remained until 6.30 p. m., when they came 
out and boarded a subway train to 42d Street, where they entered 
Hotel Astor and met the lawyer, Deuel, and another man. All went 
to a restaurant on 45th Street, where they remained until 8 p. m. 
During dinner, Deuel went to the telephone several times. He called 
up Columbus 4218, which I found was the residence of a lawyer 
named Jackson, who also has connections in Washington. When 
they left the restaurant I followed Deuel to 53 West 72d 
Street. * * * 



75 

"April 14, 1918. Went to Mt. Vernon on the morning train, 
covered 540 Third Street. At 9 a. m. Mr. Ellis came out alone, 
boarded a train for New York. Arriving in New York, went to 
telephone booth and called up Bloomfield, New Jersey, telephone 
number 1160-M Bloomfield; subject asked to speak to Mr. Montero. 
I overheard the following conversation : 

"'This is Mr. Ellis; do you want to see me to-day? All 
right, then, I will see you to-morrow. I did not understand you. 
Did you say Mr. Gonzalez is going to your house to-day ? 
With whom? 

With two other gentlemen ? Oh, I see. Well, then you 
, will be able to work out the whole plan and have it ready for me 
to-morrow." 

" ' I must have all the details so we can arrange everything. 
Will you 'phone me to the office in the morning and we will 
get together? Very good. Goodbye.' 

" Mr. Ellis then 'phoned Madison Square 6100 and asked for 
Mr. Otto Kruger. Held a conversation with him. I could not 
catch it. He walked to Broadway ; boarded a car, alighted at Thirty- 
first street; walked to Hotel Imperial, and asked bell-boy for Room 
310. * * * 

" I boarded a train for Bloomfield, New Jersey, and while cover- 
ing Montero's house, Gonzalez with two other men entered. One 
was a man about five feet six inches, short gray mustache, well 
dressed, about 48 or 50 years of age. The other about five feet-eight, 
smooth face, dark complected, between 35 and 40 years of age. I 
covered the house until 4 p. m., when they came out and walked 
down to the depot. There the four stood conversing for some length 
of time, when Gonzalez pulled some papers out of his pocket, holding 
the one against the side of the building ; at the same time he pointed 
to different places on the paper. I got in a closed machine and 
drove up until I was within 20 feet of them. The paper looked to 
me to be a map. Montero pulled a book out of his pocket and 
started writing as Gonzalez dictated." 

This brings the following new names into the conspiracy : 

Mr. W. H. Ellis, Mexican banker and broker, 35 Nassau street, 
New York; 

Walter Rogers Deuel, an American attorney, formerly connected 
with the District Attorney's office in New York ; 

Manuel Lardizabal, a Honduran, residing at 758 West End ave- 
nue. New York, whose connection with a plan to overthrow 
the present Honduran government is known to the Depart- 
ment of Justice ; and 

An American lawyer by the name of Jackson. 



76 

W. H. Field appears to have acted in the matter for the Department 
of Justice, a sort of guiding spirit traveling frequently to Washington 
and calling there upon various Government departments and Senators in 
an active pro-Gonzalez campaign, in opposition to Tinoco and the large 
American interests established in Costa Rica. 

However, the conspirators were lo'sing headway, as our Government 
seemed to be getting to a point where the recognition of the Tinoco Govern- 
ment was under consideration. The Gonzalez group knew this and a strong 
card had to be played. The United States Government and the American, 
as well as the Latin American public, had to be shown that the recognition 
of Tinoco would be highly detrimental from various viewpoints. 

Here is where the amazing part of the story comes in. It may be com- 
prehensible that a foreigner should intrigue against Americans, even in war 
time, for the sake of principle or other aims, but it is certainly remarkable 
that an American apparently closely connected with the Department of 
Justice should associate himself with a pro-German alien fighting American 
interests. 

The main purpose of the intrigue was to deliberately discredit the writer 
with his own Government. This fact is proven by a report filed in May, 1918, 
by W. Wright, connected with the New York Division of the Department of 
Justice, under Superintendent Offley. The amazing allegations made were 
the following, taken by the writer from the report itself : 

W. S. and L. G. Valentine are pro-German ; 

W. S. Valentine is allied with President Carranza of Mexico in a 
scheme to overthrow Latin American governments by placing pro- 
German governments in their place, with the aid of German money; 

W. S. and L. G. Valentine are creating sentiment throughout 
Latin America against the United States, with German money ; 

L. G. Valentine was in close touch with German Ambassador 
Bernstorfif ; 

The overthrow of the Gonzalez Government was for the purpose 
of furthering German aims ; 

The Gonzalez overthrow was planned and financed by W. S. and 
L. G. Valentine in New York, and as a result thereof they secured 
from the Tinoco Government an oil concession for German interests, 
etc. 

The treachery of this report is demonstrated by the nature of the in- 
formants. Indeed, under the heading " Sources of Information," the follow- 
ing names are given : 

W. H. Field, whose identity seemed to be thoroughly known, as 
he was not otherwise described in the strange report ; 

Alfredo Gonzalez, the deposed President of Costa Rica ; 



n 

Manuel Lardizabal, a Honduran implicated in Honduras revolu- 
tionary schemes ; 

Humberto Ferrari, another Honduran, close friend and associate 
of Lardizabal's ; he is mentioned as having given previous valuable 
information to the Department of Justice. 

The evident parti-pris of the informants brands the report as nothing 
but a crude but nevertheless fruitful attempt to deceive our Government, a 
step of the actors in this melodrama to down the Americans w^hose interests 
were to be adversely affected by the return of the Gonzalez faction to powder. 
No one connected with the United States Government ever called on the 
writer for information in the matter. He never knew, until recently, that 
such charges existed. He was never given an opportunity to defend him,self. 
Still this report, false on its face by virtue of its origin alone, has remained 
on file in various departments of our Government, and, the author is credibly 
informed, zvas sent to our authorities in Panama, thereby undermining his 
standing. 

It was a mystery to the writer, until informed of the report mentioned, 
why his cables and letters were unnecessarily delayed and tampered with, 
and his actions regarded with peculiar scrutiny by United States Govern- 
ment officials. 

Without suspecting any such intrigue, the author had aided to the best 
of his ability in revealing German doings in Costa Rica. At the time the 
Wright report was filed with the Department of Justice he had submitted to 
the Naval Intelligence in Panama a feasible plan for seizing large files of 
German documents which had, since the outbreak of the war, been closely 
concealed and guarded. The Intelligence Officer in Panama was acting upon 
the writer's request for assistants to carry out the plan when, it is clear 
from the dates, the Wright report reached Panama. Naturally, with such 
charges pending, the writer's plan was discounted, no assistants were fur- 
nished, and the important Hun documents are doubtless still resting in their 
place of concealment. 

That the above mentioned charges of the Gonzalez group and W. H. 
Field were taken seriously by our Government, regardless of their unreliable 
origin, is further shown by the following circumstance : 

In September, 1918, the author's wife left Costa Rica for New York. 
Upon her arrival she was surrounded by five or six agents, evidently repre- 
senting the Customs Flouse, Department of Justice and Naval Intelligence, 
and subjected to an excruciating cross-examination. During the course 
of the ordeal she was given to understand that her husband was representing 
Hun interests. After it was over, she, her little two-year old baby and her 
nurse were submitted to a most complete and humiliating physical examina- 
tion, only befitting the unchivalrous practices of Prussianism. Of coijrse 



78 

such things must be expected in war-times, but it does not speak well of 
our Secret Service efficiency that our Government departments were unable 
to see through the crude methods of the Gonzalez group, placing more faith 
in the words of intriguing aliens than in those of an American whose record 
is on file at the State Department; for the writer had to furnish it when 
applying for an appointment in the Diplomatic Service. 

When the author arrived in New York, in December, 1918, with a 
trunkful of important documents, neither his baggage, nor his papers, nor 
he himself were examined. This blunder had evidently been discovered. If 
that was so — how is it that our Government has taken no steps to curb the 
activities of those aliens zvho have been maliciously and wilfully misinform- 
ing our authorities, and to stop the Americans aiding them from continuing 
in their nefarious warfare against legitimate United States interests? Hozv 
is it that those same aliens are still receiving the moral and physical support 
of our Administration? 



79 



GONZALEZ' ATTEMPTS TO INFLUENCE THE AMERICAN 
SENATE AND PUBLIC. 

His Publicity Campaign Against United States Interests. Their 
Safes Rifled " With the Aid of United States 
Government Officials?" 

Gonzalez' schemes for unseating Tinoco were not making much prog- 
ress, but his group, apparently well supplied with money, was not dis- 
couraged. The next plan was to work up popular feeling against Tinoco 
and the American interests whom he desired to deprive of their rights. 
This was carried out with remarkable statesmanship and psycho-analysis. 

Nothing predominates in the mind of the average Latin so much as his 
sense of nationality and sovereignty. This was the nerve center upon which 
Hun intriguers had exerted methodical pressure. The " rapacious American 
eagle " had for years been cleverly pictured by them as hovering above the 
defenseless, small Latin-American nations, only to precipitate himself upon 
and devour them at the first opportune moment. Our actions in Panama, 
Nicaragua and Santa Domingo had been pointed out as striking examples 
thereof which made the Latin blood boil. The " your turn next " idea had 
been the venomous dagger thrust into their minds and resulted in a deep 
distrust of American motives, gradually developing into silent, if not out- 
spoken, anti-Americanism. 

This deep-rooted sentiment seemed to strike the Gonzalez group as a 
propitious field for propaganda. If it could be shown that through Don 
Alfredo's downfall American interests had secured the controlling lever of 
Costa Rica, Central, and probably, Latin Americans v/ould, on the one hand, 
become antagonistic to Tinoco, and, on the other hand, President Wilson's 
conception of international idealism could be relied upon to be equally 
affected in Gonzalez' favor. 

" Unscrupulous Americans took advantage of poor, little Co'sta 
Rica and, by clever extortion, secured for a plate of lentils oil lands 
worth hundreds of millions. 

" Costa Rica fell victim to concession hunters, commercial fili- 
busterers, and Tinoco was their blind and obedient tool." 

Music with this " Leitmotiv," it was figured, would not fail to impress 
the United States Senate and the public at large. 

Here is how the campaign appears to have been organized : 
W. H. Field, an American familiar with the Latin character, and, every- 
thing indicates, closely connected with the Department of Justice, was acting 
as Gonzalez' campaign manager. 



aBOKETTAJUA DEI POMB^^TO 



14) 



Articulo ZVII 

Bl oontratista o la CompafLla quo forme de aouerdo con la oliusula 
anterior se oompromete a mantener en Costa Rloa, durante todo el tiem- 
po de eate oontrato un representante oon Instrucciones y poderes lega- 
les bastantes para resolver todos los asuntos relaoionados con este 
contrato* 

Artfoulo ZVIIl 

Cualquier difieultad que surglere entre las partes por raz6n de 
este contrato,ser4 resuelta conforme a las leyes del paisy en ningun 
case el oontratista podra recurrir a la via diplomatlca^- 

En fe de lo oual firman los otorgantes en la ciudad de San Jos6 a 
los veintltrSs dlas del mes de Setlerabre de mil noveoientos quince. 



y ^^^. 



San JosS, veintitrls de Setiembre de nil noveoientos quince. 
Apru^ljase el contrajo anterior 



El Secretarlo de Estado en el Despaoho de Fomento 

The above is the last page of the American oil contract bearing President Gon- 
zalez' signature below the sentence " the foregoing contract is approved." After the 
Legislature had acted upon his subsequent special message of recommendation and 
ratified the grant, President Gonzalez vetoed it by claiming the right to rescind his 
ow^n signature. The Legislature thereupon nullified his veto and the contract went 
into effect on November 12, 1916, two and one-half months before the Tinoco coup 
d'etat. Gonzalez novv^ alleges that his overthrow was engineered by the American oil 
group, in order to secure the oil concessions from the Tinoco Government ! 



81 

W. R. Deuel, another American, former Assistant District Attorney 
of New York, became the legal adviser. 

Manuel Lardizabal, the Honduran of revolutionary tendencies, became 
a valuable ally. 

Manuel Castro Quesada, Gonzalez' Washington Minister, took advan- 
tage of his connections at the national capital in an attempt to secure the 
moral support of our Government for an anti-Tinoco revolution. 

Rafael Oreamuno, former secretary of the Costa Rican Legation in 
Washington, a clever young lawyer, was a handy aid into whose hands 
was placed the anti-Tinoco, pro-Gonzalez campaign in the Latin-American 
legations and embassies in Washington. 

W. H. Ellis, Mexican banker and broker, was to secure financial aid 
for the revolution, in exchange for an oil concession. 

Edmundo Montealegre, brother-in-law and intimate friend of the 
German Consul in Costa Rica, and Eduardo Bonilla, Costa Ricans, were 
evidently aiding with good advice and money for the sole purpose of 
quenching their vendetta thirst upon President Tinoco's brother. They 
were the ones who established the close connection between Gonzalez and 
W. H. Field. 

There are many other minor actors, but the above were the stars in 
the " comic opera " which has just reached a dramatic denouement. 

Here we have a group of aliens with a pro-German at their head, openly 
preparing on our hospitable shores a revolution against a pro-Ally govern- 
ment in Central America and, actively aiding that clique, several Americans, 
at least one of zvhom is either officially connected or in close touch with the 
Department of Justice! 

There are two powerful groups of United States interests operating 
in Costa Rica, the United Fruit Company, and the oil interests. These, the 
Gonzalez group figured, must be shown to be the " claws of the rapacious 
American eagle." A theory appealing romantically to the American and 
Latin American public alike was thereupon worked out. 

The first stage of the campaign was the publication of a series of sen- 
sational articles in a paper called the " New York Curb," the following 
extracts rendering an idea of the Gonzalez publicity trend: 

" Oil and Fruit Interests here charged with creating Costa Rican 
Revolution for profit." 

" Oil concessions from de facto government of problematical 
value." 

" Valentine is accused of bribing Costa Rican Legislature." 
" Gonzalez, warned of impending coup, ignored same." 
" Germany and Austria only nations to recognize de facto gov- 
ernment." 

" People rising to throw off Tinoco Government." 



82 

" Valentines got concession from Tinoco and sold it to Sinclair 
interests." 

In other words, it was claimed that the United Fruit Company and the 
oil interests had formed a combination and jointly overthrown the Gon- 
zalez Government, placing Tinoco in the presidency as their handy tool. 
In order to contradict once and forever this ridiculous allegation, the 
United Fruit Company caused a hearing to be held before Counsellor Polk 
of the State Department, at which it was shown conclusively that no 
connection existed between the United Fruit Company and the oil venture, 
and that the former had nothing whatever to do with the change of gov- 
ernment. 

Upon hearing of the absurd allegations the author, then in Panama, 
sent an affidavit to the Department of State, giving a summary of the oil 
negotiations ; showing that the concession had been a Gonzalez initiative ; 
that it had been approved, vetoed, reapproved and capitalized during Don 
Alfredo's regime ; and that neither the writer nor anyone connected with him 
had the least thing to do with the Tinoco coup d'etat. 

Their first plan having failed, the ("lOnzalez-Field combination had to 
think out something better. Field's ingenuity and his closeness to the 
Department of Justice proved valuable. We were at war and our Govern- 
ment had built up a wonderful machinery for prying into the affairs of 
Americans and aliens alike, in search for pro-German connections. The 
evidence indicates that this machinery xvas taken advantage of by the 
Goncalec grouf^; that " tmth the aid of United States Government officials" 
tJie private correspondence in the oil venture ivas seized and — this is the 
most amazing feature — delivered to the deposed pro-German President, Gon- 
zalez. Of course nothing was encountered therein which could even remotely 
reflect upon the genuine Americanism of those connected with the petroleum 
deal. As was natural, however, the private letters contained such intimate 
and frank expressions as are customary between associates, between 
nephew and uncle, characterizing certain individuals in a somewhat un- 
complimentary manner. The correspondence abounded with data showing 
Gonzalez' treachery, but the paragraphs bearing thereon were wisely sup- 
pressed and use made only of passages favorable to the former president. 
These latter passages were contained in reports rendered prior to the dis- 
covery of Gonzalez' bad faith. Had the later reports been published as 
well, the President would have been shown up in his trvie light. By the 
clever manipulation and fitting comments of an experienced newspaper man, 
a sensational story was pieced together to which the " New York Herald " 
and the " New Orleans Picayune " gave prominent space for six consecutive 
days. The following extracts thereof show the nature of the alleged expose : 
" Revolution in Costa Rica revealed as outgrowth of bribery 
for oil fields." 



83 

" Deposed President tells why Mr. Wilson refused recognition. 
Names New York men." 

" General Gonzalez says the Tinoco uprising was financed from 
this city." 

" This is a story of how a group of Americans seekmg an oil 
concession bought a government in Central America, and, failing 
finally to win over the President of the Republic, instigated a revolu- 
tion. It gives for the first time the reasons zvhy President Wilson 
so steadfastly has refused to recognise the revolniionary government." 

" The President was busy with his fiscal reforms ; a great ad- 
mirer of President Wilson, he was seeking to apply to Costa Rica, 
then in financial difficulties, some of the measures being applied in 
the United States." 

An important Spanish publication called " La Reforma Social," pub- 
lished, in its number of January, 1919, a 20-page article over the signature 
of a noted anti-American Venezuelan, the following extracts of which show 
that Latin Americans had been greatly impressed by Gonzalez' publicity 
campaign : 

" The act of treason and force by which the constitutional Presi- 
dent of Costa Rica was overthrown and substituted by his Minister 
of War on January 27, 1917, had its origin in the intrigues, machina- 
tions and conspiracy of an American company." 

" Ex-President Gonzalez, object and victim of the crime per- 
petrated by his Minister of War and conceived and prepared under 
the inspiration and with the co-operation of that Company." 

" But never in America has there been a case of a government 
overthrown by the opposition and the corrupting and dissolving 
power of a foreign concessionary company. What aggravates the 
case is the fact that the government destroyed by that company was 
a constitutional government presided over by a man whose only 
crime was precisely his unshakable integrity. The company could 
not corrupt him, and to defeat the will of the President and acquire 
at any cost the monopoly to which it aspired, influenced and allied 
against him, through intrigue, imposition and corruption, all parties 
and Congress, after repeated and vain efforts to secure the help of 
Washington in the shape of diplomatic aid or frank intervention. 
This explains why everybody was with the usurper when he assumed 
in the garrison the dictatorship on January 27th. They were all sold 
to the company in one shape or another and interested in the ap- 
proval of the contract." 



jar 
Ar- 
:o, 
ide 

lue 

)0S 

3or 
po- 
tie- 
ita- 

ion 
me 
en- 



84 



Decreta 



Articulo iSnico. — Impruebase el proyecto 
de contrato «Pinto-GreuIich» de 23 de setiem- 
bre de 191 5. 

Dado, etc 

Si contra lo que espero, -el Congreso d e- 



termina rechazar esta iniciativa v ratificar cons- 
titucionalmente el decreto numero 1^1, yo en 



respetuoso acatamiento de sus resoluciones, lo 
mandare ejecutar, pero de sus consecuencias, 
no ser4 mi nombre responsable, ni ante el pais 
ni ante la historia. 

Soy de U U senores Secretaries, 
atto. s. s., 

Alfredo Gonzalez 

San Jose, 2 i de agosto de 1916 



muy 



ALFREDO GONZALEZ 

Presidente Constitucional de la Republica 
de Costa Rica, 

Decreta. 

Articulo unico. — Convocase al Congreso 
Constitucional- a sesiones extraordinarias que 
se inauguraran a las dos de la tarde del lunes 
seis de noviembre proximo, con el objeto de 
que conozca de los siguientes asuntos pen- 
dient^es. 

1 ° — Ley sobre formacion del Catastro, 

2 ° — Ley General de Impuestos Directos; 
3.° — Ley sobre la Contribucion Territorial; 
4.° — Ley del Impuesto sobre la Renta; 
5.° — Ley sobre la Contribucion para las 

Obras Publicas de interes especial o local; y 
^^^ 6 ° — Del veto del Poder Ejecutivo a la 
( Ley que aprueba el Contrato Pinto-Gr eu)irlj ,> 

Dado en la ciudad de San Jose, a lo 
veintiocho dias del mes de octubre de mil nc 
vecientos diez y seis. 

ALFREDO GONZALEZ 

El Secretario de Estado 
en el Despacho de Gobernacidn, 

Juan Rafael Arl^s 



Ale 



Or( 

ten 

de 

ten 

Es 

ha 

Pr( 

zu( 



FICIAL 



ear 



jlsos 
>arte 

can- 
s de 
itral, 
den- 
Con- 
n el 



tenta 
abli- 
Al 
irre- 
d de 
y en 
:plo- 
uevo 
xcio- 
iro- 



N° 1 

El Congreso Constitucional de la 

Repi^'blica de Costa Rica 

En sesion celebrada el'dia diez de noviem- 
bre de mil novecientos dieciseis, acordo por 
mas de la mayoria de dos tercios requerida por 
la Constitucion-f olitica, jiiandar promulgar en 
La Gaceta, Diario Oficial, el decreto que an- 
tecede, para sus efectos de Ley de la Republica. 

MAxnro Fernandez 

Presidents 

Ad. Acosta Alberto Calvo F. 

Secrttario Secretario 



Secretarfas de Estado 



85 



From Official Gazette No. 44, Year 38, Tuesday, August 22, 1916. 

* * * jf contrary to my hope Congress determines to reject this initiative and 
constitutionally ratifies decree No. 51, / shall have it executed in respectful obedience 
to its resolutions * * *_ 

(Signed) Alfredo Gonzalez. 
San Jose, August 21st, 1916. 



From Official Gazette No. 101, Year 38, Sunday, October 29th, 1916. 

Alfredo Gonzalez, 

Constitutional President of the Republic of Costa Rica, 

Decrees : 

Sole article. The Constitutional Congress be convened in special sessions to be 
inaugurated at 2 P. M., Monday, November 6th next, for the purpose of taking up the 
following pending matters : 

6. The veto of the Executive Power to the Law approving the Pinto-Greulich 
contract * * *_ 



From Official Gazette No. 113, Year 38, Sunday, November 12th, 1916. 

No. 1. 

The Constitutional Congress of the Republic of Costa Rica in its session of 
November 10th, 1916, decreed by viore than the majority of two-thirds required by the 
Political Constitution to cause to be prorhulgated in the Gazette, Official Daily, the 
foregoing decree for its effects as Law of the Republic. 

(Signed) Maximo Fernandez, 

President. 
(Signed) Adan Acosta, (Signed) Alberto Calvo F., 

Secretary. Secretary. 



From that day until January 27, 1917, when Gonzalez was overthrown, the Ameri- 
can oil grant known as the Pinto-Greulich contract and referred to in the above final 
decree as ratified over the President's so-called veto, Gonzalez, faithful to his above 
printed promise of August 21, 1916, and in accordance with the Costa Rican constitu- 
tion, allowed the peaceful exploitation of the oil lands covered. The President accepted 
the respective guarantee deposit and certified in writing to the contractor's compliance 
with various clauses. The validity of the grant was never questioned ; Gonzalez did 
not appeal to his Courts and placed no obstacle in the capitalization of the concession 
which was effected on December 23, 1916, over a month before his downfall. Never- 
theless, it is now claimed, in the deposed ruler's publicity campaign, after two j-ears 
and a half have elapsed, that the American oil grant grew out of the Tinoco Govern- 
ment following that of Gonzalez, and that the latter's regime was overthrown with the 
financial aid of the American petroleum group intent upon ousting Gonzalez because 
he had refused to honor the grant ! 



What is shown in the documents is summarized by Mr. Gonzalez him- 
self in a letter he wrote under date of September 21, 1918, to Senator Hitch- 
cock, Chairman of the Senate Committee on Foreign Affairs. The latter, 
featured by the newspapers named, said in part : 

" Should the sub-committee resolve to conduct that investigation, 
I would like very much to be privileged with an opportunity to bring 
to its knowledge documentary evidence of particular importance in 
connection with the matters to be investigated. 

" I wish to submit to the sub-committee private correspondence 
of the American citizens Messrs. Lincoln G. and Washington S. Val- 
entine, and others, for the purpose of proving the following: 

" ' that the conflict between a group of American citizens and 
the Executive of Costa Rica over the granting of an oil concession, 
coveted by private American interests and opposed by the President 
of Costa Rica, was the chief cause of the coup d'etat of January 27, 
1917, which overthrew the constitutional government of that country; 

" ' that Federico Tinoco, as Minister of War, raised in arms and 
overthrew the legal government in furtherance of his bribery agree- 
ment with Valentine. 

"'In the coup d'etat of January 27, 1917, Federico Tinoco was 
only the tool of American capitalists.' " 

The pending publication of these articles was known to the writer's 
uncle, Washington S. Valentine of New York, a week or so before. He 
communicated with Mr. William A. Willis. Acting Managing Editor of 
the New York Herald, asking him to hear the other side before publishing 
anything, because the charges were malicious and false. Mr. Willis there- 
upon made a most surprising reply, throwing the whole responsibility upon 
our own Government. His statement may be summarized as follows : 

"/ am sorry, Mr. Valentine, the material upon which the articles 
are based comes from the Naval Intelligence and the Department of 
Justice. Nothing ivill deter us from publishing the articles." 

That the Herald end the Picayune were firm in this belief goes forth from 
the following introductory paragraphs : 

" The revelations are based on documentary evidence accumu- 
lated by the deposed president, in some cases with the aid of United 
States government officials. 

" Until now the truth of the Costa Rican case has not been made 
public and zvas knozun only to a fciv officials of the American Gov- 
ernment. 

" The originals zvere concealed in safes in a dozen places." 



87 

/;; other zvords, it is alleged that the United States Goveniment took 
advantage of its wartime secret machinery to rifle the safes of large Amer- 
ican interests, seise their private correspondence and deliver it to Alfredo 
Consoles, a deposed pro-German president, so that he might make usd 
thereof by conspiring and intriguing ad libitum against American interests! 
The author was loath to beheve this and rather of the opinion that 
the " United States Government officials " referred to were mere under- 
lings working without the authority of department heads ; that the New York 
Herald and the New Orleans Picayune were mistaken in assuming that the 
story they published was given out by our Government as the first explana- 
tion of President Wilson's motive in refusing to recognize the Tinoco 
Government. It must be remembered that Mr. Wilson took this decision 
in February, 1917. The " rifling of the safes " referred to occurred as late 
as the summer of 1918. 

It now appears that the State Department was behind the published 
story, unless, indeed, the Associated Press was mistaken in releasing on 
August 22d, 1919, the following: 

" It was stated here today officially that American citisens had 
been implicated in the Tinoco revolution. The State Department was 
said to have letters written by American conspirators telling of their 
investments with the Tinoco faction, but the Department refused 
to make public either the letters or the names of the Americans in- 
volved." 

If this version and that of the Herald and Picayune are correct it reveals 
a stupendous condition of affairs, and the question might be. asked : 

" Was our Government so hard pressed for finding grounds 
to justify before the public its persistent enmity towards the Tinoco 
Government and its inexplicable friendship for the Gonzalez faction 
and were Americans whose views on the subject difitered from those 
of the Administration to be made the ' goats ' ? " 

The failure of our Government to deny the amazing allegation con- 
tained in the publications mentioned lends much color to this question. 
The writer called on the State Department official in charge of Central 
American affairs and asked to be officially informed whether such charges 
as had been published were entertained by the State Department. The reply 
was that the Department had taken no cognizance of the publications and 
that no charges existed. 

Either the allegations referred to are before our Government and 
given credence, in which case the accused Americans should be called upon 
for an explanation and defence ; or the Government knows the charges to be 
untrue, in which case a clear denial should be made. It is remarkable, how- 
ever, that President Wilson should apparently base his present Costa Rican 



88 

policy upon such charges, which even a superficial investigation would prove 
baseless. 

However absurd and false on their face the charges which the deposed 
executive caused to be published and placed before the United States Senate, 
are, it is necessary to occupy a little space in contradicting them. 

That the author had no interest in overthrozving the Gonzalez Govern- 
ment and placing the Tinoco regime in its stead is clearly shown by the 
fact that the oil concession at the bottom of the story zuas properly granted 
and capitalized during Don Alfredo's tenure of office, as has been demon- 
strated in this account. Moreover, the differences between the deposed 
president and the writer in the matter had been patched up two and a half 
months before he ceased to hold his high office. No legal formalities were 
lacking. No additional facilities were needed or sought. Gonzalez' opposi- 
tion had ceased, friendly messages having been cxcJmnged with him. WhOt 
advantage ivas there in ousting him? 

As to the charges of bribery, Don Alfredo himself has specified them 
in his letter already cited to Senator Hitchcock, Chairman of the Foreign 
Relations Committee, on September 21, 1918: 

"That through the expenditure of several hundred thousands 
of dollars the said American interests represented in Costa Rica 
by Lincoln G. Valentine, in order to have coveted concessions passed 
by Congress and to avoid certain legal obstacles, bribed and cor- 
rupted the following public ofBcials of Costa Rica: 
"Two successive Presidents of Congress; 
"Several Congressmen ; 
"The Attorney General; 
" A Judge of the Civil Court ; 
" A Clerk of the Court of Appeals; 
" Employees of the Court of Law for Fiscal Matters ; 
" Employees of the Presidential Mansion and of the offices of 

the Ministries, and other employees of the Government. 
" That the same American interests bribed the then Minister of 
War, Federico Tinoco, with whom they conspired and planned the 
overthrow of the constitutional government of Costa Rica. " 

In other words, Gonzalez claims that his own Administration was cor- 
rupt with the exception of himself and his immediate friends. It is prob- 
ably the only case on record of a former president defaming his own 
Administration, country, political appointees and friends, by branding them 
as " purchasable articles ", and coming before the public of the United 
States, crying: 

" My compatriots are all crooked. You can buy them for a 
song. I alone was honest and for that reason ousted !" 



As a selfish come-back to smooth over his wrinkled pride, Gonzalez was 
striving to wipe out with one stroke of the pen the enviable record of 
the country over which he had presided. Costa Rica had for many decades 
enjoyed the reputation of the " Switzerland of America " ; of orderly and 
honest institution; well regulated and fair justice; ambitious progressive- 
ness through modern education and hard working citizens. However, the 
deposed ruler cannot willfully mar this glorious history by blaming Ameri- 
cans therefor. A certain measure of selfish interest is bound to prevail 
over public interest in all political entities. The temptation is too strong 
for every politician, without exception, to resist it. This is a sad but 
acknowledged fact the world over. In Costa Rica, however, the author has 
found a strong innate sense of political honesty which speaks highly of the 
hereditary Spanish pride characteristic of the pure Hidalgo blood flowing in 
the veins of their statesmen. Every Costa Rican president left his high 
office poorer than when he assumed it. That is in itself sufficient proof. 

The country was far from agreeing with Don Alfredo, and the factors 
in favor of the American oil grant were in no way limited to those directly 
interested as owners of oil lands under lease to the concessionaire. They 
included practically all of the highly respectable personages who had been 
prominent in Costa Rican history. This is shown by the following align- 
ment of the more important elements in its favor and those siding with 
Gonzalez' plan of opposition. 

In Favor of the American Oil Rights. 

Ricardo Jimenez, the president of Costa Rica preceding Gon- 
zalez ; a prominent lawyer ; wealthy. 

Asencion Esquivel, former president of Costa Rica ; lawyer ; 
wealthy. 

Cleto Gonzalez Viquez, former president ; prominent lawyer ; 
lucrative practice. 

J. J. Rodriguez, former president ; prominent lawyer ; wealthy. 

Dr. Carlos Duran, former president ; prominent physician ; 
wealthy. 

Bernardo Soto, former president ; prominent lawyer ; one of 
the wealthiest men in Costa Rica (now dead). 

Joaquin Bernardo Calvo, for 23 consecutive years Costa Rican 
Minister in Washington and dean of the Diplomatic Corps 
there (now dead). 

Luis Anderson, prominent lawyer ; president of the Central- 
American Peace Conference ; Treasurer of the American 
Institute of International Law ; diplomat ; writer. 

Roberto Brenes-Mesen. scientist; writer; philosopher; idealist; 
Gonzalez' Minister Plenipotentiary in Washington. 



90 

Leoniclas Pacheco, prominent lawyer ; former Cabinet member ; 

diplomat ; writer. 
La Informacion, the oldest and most prominent pro-Ally daily. 
La Prensa Libre, pro-Ally evening paper. 
La Linterna, pro-Ally comic weekly. 
Over 1,000 Costa Ricans who, by leasing their oil rights to the 

American group, had acquired a royalty interest. 

Opposed to the American Oil Rights. 

Alfredo Gonzalez, pro-German President of Costa Rica. 
Manuel Dieguez, pro-German lawyer and adviser of Gonzalez ; 

representing European petroleum interests. 
Manuel Castro Quesada. Gonzalez' chum and Washington Min- 
ister. 
Johann Kiimpel, German propagandist, friend and associate of 

Gonzalez (on our black list). 
Rogelio Fernandez Giiell, pro-Hun editor of the Gonzalez- 

Kiimpel Germanophile paper El Imparcial (now dead). (On 

our black hst.) 
El Imparcial, the daily just referred to. (Suppressed by Tinoco. 

On our black list.) 
La Nucva Era, another Hun-controlled newspaper. (Suppressed 

by Tinoco. On our black list.) 
A small group of satellites favoring Don xA.lfredo's policies. 

Let us now go through the former President's own list of officials who 
he claims were " bribed and corrupted " by the writer and discuss, seriatim, 
the most prominent among them. 

Leonidas Pacheco. — Publicly retained as Chief Counselor by the Amer- 
ican interests. It is true that he was President of Congress, but there is no 
more reason for a member of Congress in Costa Rica to give up his private 
practice than there is in other countries. Pacheco' was not President of 
Congress, however, and did not vote when the oil concession was under 
discussion, which fact in itself disposes of the charge. 

Victo Vargas. — It is correct that he was civil judge, but the American 
group never had any litigation before his court. He was never called upon 
to decide any question pertaining to the petroleum matter. He had leased 
his oil lands to the concessionaire and, after he had ceased to be judge, was 
retained in one instance as attorney. 

Manvel Bcjerano. — He had been appointed as Attorney General by 
Gonzalez himself and was the latter's trusted friend. Bejerano has always 
been considered as the personification of honesty. He never received a cent 



91 

from the grantee or his agents, owns no oil land and fought the American 
group bitterly to the very last, upon the President's instructions. 

Luis Anderson. — He acted as an associate counsel. Neither law nor 
custom prevented him from exercising his profession, after he became a 
Congressman. 

Various other attorneys, some belonging to Congress, who had, to the 
knowledge of everybody, been retained for special legal duties. The title 
research and compilation work was immense, as there were several hundred 
titles and assignments to be investigated and cleared, with only a few months 
available for the task. Anyone with experience in Latin America knows 
what that means. The work could be completed in the specified time only 
by dividing it among a number of attorneys. 

Federico Tinoco, until a few weeks ago, President of Costa Rica, then 
Minister of War. He never received a penny from the American interests, 
directly or indirectly, and was always considered as a dangerous opponent 
whose ill-will was feared when he became President. 

Gonzalez further alleges that a number of court clerks, ministerial and 
presidential employes had been "bribed." The implication is ridiculous on 
its face. What tangible advantage could be derived from " bribing " such 
underlings? What help could they give? It is quite true that among the 
thousand or more Costa Ricans who owned oil rights there were govern- 
ment employees, but they had acquired their holdings long before the Amer- 
ican group came to Costa Rica, and their lands had been leased by the latter 
on the same terms as all others, without discrimination. It is also a fact 
that, for investigating and perfecting the titles of the acquired oil zones, the 
court for fiscal matters had, at times, to be kept open all night. The clerical 
work entailed thereby was very extensive, and it is natural that the clerks 
were entitled to and did receive payment for such special overtime services. 

A.S to Maximo Fernandez, the other President of Congress, naively 
charged by Gonzalez with having been corrupted by the writer, the shoe is 
on the other foot. Fernandez was the leader of the party which had lifted 
Don Alfredo into his high office. The latter and many of his friends and 
Cabinet appointees also belonged to it. After having formed the pro-Ger- 
man, anti-American combine already described, Gonzalez began to fear the 
opposition of his party and political friends, lest they should refuse to 
carry out plans against which their conscience rebelled. He needed a club 
with which to force them into blind obedience. It has already been related 
how Kumpel, the " Rasputin," hit upon a convenient, if not ethical, plan 
to accomplish this purpose ; how the assets of the Commercial Bank had been 
pilfered by the conspiring ruler ; how he had, finally, secured by a high- 
handed act of force the possession of notes guaranteeing his party's cam- 
paign debt ; and how he had thereupon relegated to the scrap he?vp his obliga- 



92 

tion of paying that outstanding liability. The notes seized bore the signa- 
tures of Fernandez, the President's most intimate friends, and — last but not 
least — his own. To force the defeat of the American oil rights and the suc- 
cess of his other plans, Gonzalez was swinging this Damocles sword relent- 
lessly over the heads of his influential partisans. 

It is evident from the mass of correspondence on which this booklet is 
based that the victims so threatened required an effective assurance of pro- 
tection, in the event that Don Alfredo should carry out his menace and ruin 
them through the enforcement of the notes. Lacking such guarantee, they 
would naturally have been cowed and whipped by the ruler into silent 
obedience, and the European oil interests favored by Gonzalez would have 
secured the permanent control of the strategic petroleum base at a time when 
the Hun military successes were approaching their climax. The author did 
therefore the only plausible thing under the circumstances— by extending 
to the blackmailed politicians a written assurance protecting them against 
the fall of the sword. This guarantee, given in October, 1916, about two 
months after the ratification of the American grant, was for no other pur- 
pose than to appease the startled minds of the honorable Costa Ricans af- 
fected by Gonzalez' Prussianized threat. 



93 



PRESIDENT TINOCO'S TESTIMONY. 

Costa Rican Congress Unanimously Rejects Gonzalez'' Charges as 

Baseless and Untrue. 

In connection with the Gonzalez publicity campaign the following 
document is interesting: 

From La Gaccta (official daily), No. 110, 
Friday, November 8, 1918. 



" Constitutional Congress. 
" Fifth Special Session. 

"Joint Session of Both Chambers at 4.20 P. M., October 28, 1918. 

Article II. 

" The President of Congress stated that the President of the 
Republic was in the Office of the Secretary for the purpose of at- 
tending, the Session. That high official was immediately introduced 
with the customary honors into the hall of the National Assembly and 
seated at the right of the President of the Chambers. 

" The First Magistrate of the Republic said that it was his cus- 
tom to report to Congress every matter of transcendental importance 
to the nation and that his presence among the representatives of the 
people was in obedience to this motive. * * * 

" With regard to the political matter which brought him before 
these Chambers, President Tinoco stated that * since former Presi- 
dent Gonzalez Flores had left Costa Rica, it was notorious that he, 
as well as his former minister, Castro Quesada, had devoted them- 
selves to the thankless task of discrediting their nation in other coun- 
tries, employing for that purpose as principal weapons lies and 
defamation, besides a persistent and constant press campaign through 
which they gave themselves importance by publishing articles which, 
beyond a doubt, have all been written by the same hand. 

" ' I would not bother about these matters,' he said, ' were it 
not that, from personal questions, they have drifted into defamation 
of the nation and, in this case, I am obliged for the honor of the 
Republic and in defense of the prestige of the country and its repre- 
sentatives, to protest most solemnly and energetically against this 
unhealthy campaign. 

" ' I shall refer briefly to the political events after January 27, 
1917, which events, as all of the Senators and Deputies know, the 



94 

North American Senate has been investigating by virtue of a formal 
accusation wherein an attempt was made, through false witnesses, 
to show that I had received $50,000 from Mr. Valentine to aid in the 
expense of the movement of January 27. 

" ' The whole country knows and the representatives of the peo- 
ple know the procedure in that petroleum business in which I had 
no intervention. For the purpose of refreshing your ideas and con- 
densing the facts so as to fully bring out the truth, it is advisable that 
we study briefly the history of the matter with documents in hand. 

"'On September 23, 1915, there was signed and approved, a 
contract bv the President of the Republic, Alfredo Gonzalez, and the 
Minister of Fomento, Mr. Enrique Pinto, on the one hand, and Mr. 
Leo Greulich on the other. 

" ' On May 9, 1916, the said contract was sent to Congress by 
the Executive and the Minister of Fomento. 

" ' On August 12. 1916. Decree No. 51 was issued by Congress, 
approving the said contract signed by the Executive. 

" ' On August 21 of that year, President Gonzalez-Flores pre- 
sented to the Chamber a note of remarks wherein he stated that the 
Decree would not receive the sanction of the Executive power and 
proposed at the same time another decree for the rejection of the 
contract. 

" ' On September 5, 1916. the President of Congress, Dr. Maximo 
Fernandez, ordered the publication of Decree No. 51, approving the 
Pinto-Greulich contract because it was a law of the Republic and 
not vetoed in accordance with the Constitution. 

" ' On September 16. President Gonzalez-Flores refused to pub- 
lish Decree No. 51 and offered to convene Congress in special session 
to define the matter. 

" ' On October 28 he convened Congress to discuss the veto to 
the Pinto-Greulich contract, and in the Gazette of November 12 of 
the same year the contract was published as a law of the Republic. 
The Official Gazette of that date published Decree No. 1 issued by 
Congress on November 10, wherein the publication of Decree No. 
51 was ordered, for its legal effects. 

'' ' These eloquent dates are evidence that, when I assumed the 
power, the petroleum business referred to was already concluded 
and a lazv of the Republic and that, therefore, Mr. Valentine ivould 
have had no reason for placing in my hands any money for the evolu- 
tion of the 27th. * * * 

" ' While during that period I formed part of the Cabinet of 
Mr. Gonzalez-Flores, nobody can say that I in any way recommended 
the approval of the petroleum contract. 

" Gonzalez-Flores now alleges that the evolution of January 27 



95 

was aided with the money of the contractor, Mr. Valentine, but this 
is a stupidity and it is maHcious to even think so. 

" ' I wish to repeat that, during my administration, neither I nor 
any influential element of my Government had any kind of political 
or commercial connection with Mr. Valentine. 

" ' This is a case. Representatives, where the honor of Costa 
Rica is being soiled in a foreign country by none less than a citizen — 
a bad citizen — who has been President of the Republic — and this is 
extremely sad. 

" ' Now, gentlemen, by reason of these circumstances, I am 
obliged to recall the history that concerned the motives which com- 
pelled me to proceed as I did on January 27. There are important 
details in the matter which few persons know and which, modesty 
aside, it is necessary for the country to be informed of. Do not 
take these declarations as the creatures of passion, because I am far 
from feeling such unhealthy sentiments and, if I now dwell upon 
these matters, I am obliged to do so by imperative circumstances. 

" ' I shall be brief — very brief — and in my statements I shall 
have to go back to the time of the electoral campaign which pre- 
ceded our last one, as heated and bitter a campaign as few recorded in 
the history of our country. 

" ' I was a Republican and fought with vim and patriotism for 
the triumph of the ideals of that party. I was the one who most 
strongly opposed the combination arising at the last hour between it 
and the Civil Party, and I always devoted my entire efforts and 
energy to breaking up that combination. 

" ' Nobody can say that I visited the house of the candidate of 
the Civil Party, nor that I had any conference with him. 

" ' To cause the failure of that political plan, I had on January 
8, 1914, a conference with former President Gonzalez Viquez in the 
office of Mr. Baudrit, who is today Senator and now present, for the 
purpose of reaching an agreement with the Duranists, which was later 
carried out and resulted in the assumption of power by Mr. Gonzalez- 
Flores who, in those days, I had in my house, you might say, hidden. 
In his incomprehensible political incapability, he always doubted that 
the matters were" serious. He did not believe in success because it 
never entered his imagination that he might rise to the position of 
President of the Republic. 

" ' His peculiar lack of faith in the matter went so far that, 
thinking it was all a joke, he declined on April 27 to receive in my 
house, where he had remained, the delegates of the Duranists, Mr. 
Leonidas Pacheco and Mr. Ernesto Martin, representing seventeen 
Deputies who, added to the five Republicans, gave him the triumph. 



96 

" ' I then had to impose myself upon him to make him accept 
his designation as presidential compromise candidate, and it was 
through me that he accepted because he almost believed — I repeat it — 
that he was being made a plaything. 

" ' On the night of that historical political event, when former 
President Jiminez decided to guarantee the election, all the armed 
forces of the Republic were placed at my disposal, and it was I who 
made Gonzalez-Flores President of the Republic. The troops on 
that night shouted " Vivas " for me, and that same night I said to the 
troops, "These ' vivas ' must be for Mr. Gonzalez-Flores." 

" ' This is how Mr. Gonzalez-Flores attained the presidency and, 
immediately, he proceeded to break the obligations which he had con- 
tracted with all of the parties. He began with the Duranists and 
then continued zvith the Republicans. And then with his closest 
friends. He was going to exile me. I fell into disgrace before the 
rare caprices of that Governor because I did not agree with many of 
his political ideas. Hozv could I agree with him when, in economic 
matters, the country was handled by the German Kilmpel and, in 
Public Works, by the German Fetters? 

" ' In other words, the two most important branches of the public 
administration were subject to the caprices and decisions of tzvo for- 
eign enemies of this country, because the nation has been and is, zmth 
soul and body, truly and heartily in favor of the Allies. 

" The Fro-Germans were, therefore, disposing of the country's 
fate. They zuere the ones who governed — who made and unmade — 
who conducted the country towards an unsoundable abyss. Before 
this terrible danger, the nation trembled with horror. 

"I proceeded therefore conscientiously to save the country. 



The President thereupon moved that the Chambers in joint session 
name a Committee to investigate the charge of Alfredo Gonzalez that 
the cn^erthrow of former President Gonzalez had been financially aided 
by Mr. Valentine. The motion was submitted to a vote and it was unan- 
imously decreed that there was no reason for naming a Committee because 
everyone present was fully aware from his own personal knowledge that 
the charge zvas absolutely untrue. 



■♦•» 



97 



THE AMERICAN SENATE AND THE CASE OF COSTA RICA. 

The Costa Rican matter was finally submitted to the United States 
Senate and referred to a subcommittee composed of the following: Sena- 
tors Williams, Saulsbury and Swanson, Democrats ; Senators Lodge and 
Brandegee, Republicans. The writer was in Costa Rica at the time and 
at once sent the following cables : 

" November 24, 1918. Inform Senate Committee Gonzalez 
allegation regarding our alleged financial assistance Gonzalez over- 
throw outrageous lie, easily disproved ; part systematic intrigue 
deceive American Government and besmirch honorable Americans. 
Will submit conclusive evidence. Anxious proceed Washington 
immediately testify." 

" December 4, 1918. Will submit Senate documentary evidence 
showing conclusively no connection existed Tinoco Valentine, and 
Gonzalez allegation cleverly framed but absurd lie. Will unmask 
Gonzalez supplying documents showing his pro-Germanism and 
active, persistent aid to German Government interests. Will also 
show his anti-Americanism and tricky efforts appear pro-Ally when 
he needed Washington backing, and his unscrupulous attempt deceive 
American Government, Senate and public for that purpose. Leaving 
first steamer with documents." 

On January 29th of this year, the sub-committee reported, unanimously 
recommending that the United States Government recognize Tinoco, as 
the investigations had disclosed nothing on which a continued suspension of 
diplomatic relations could be based. 

Not o'nly did our Government pay no attention to this Committee 
Report but nothing effective was done to prevent the Gonzalez faction 
from organizing its revolutionary activities in Nicaragua, a quasi-pro- 
tectorate of the United States. Tinoco was obliged to keep an army 
mobilized to defend himself against aggression from that neighbor, thereby 
greatly draining the public treasury. Finally, an assassin, presumably sent 
from Nicaragua, shot and killed Joaquin Tinoco, the President's brother 
and War Minister, thereby depriving the Government of its real, physical 
leader. There remained for Tinoco to do one of two things; either con- 
tinue to defy our State Department and ultimately meet his brother's fate, 
I or to throw up his hands. He followed the latter, saner course, by departing 
I for Europe, after delivering the presidency into the hands of a designate, 
I Juan Bautista Quiros, a worthy intelligent business man of integrity, 



98 

educated in the United States and strongly pro-American. Tinoco's 
administration had lasted two years and a half, in open defiance of what 
he considered President Wilson's unjustified dictum. 

As reported by the Associated Press on August 22nd, 1919, President 
Wilson's present Costa Rican policy is drastic. 

" President Juan Bautista Quiros of Costa Rica, successor of 
Federico Tinoco, has been notified by the American Government that 
the validity o'f the Tinoco Constitution or any Government acting 
under that Constitution, would not be recognized by the United 
States. Ex-President Gonzalez has been informed by the State 
Department of this action. He has been in Washington since his 
overthrow by Tinoco and has been in close touch with the revolu- 
tionary movement against the Tinoco regime, headed by Julio Acosta, 
Minister of Foreign Affairs, under Gonzalez." 

In other words, Costa Rica reverts once more to its status of January 
27, 1917, when President Gonzalez was overthrown, and * * * the 
latter has been so informed by our Government. This implies the decided 
recognition that Alfredo Gonzalez, now in Washington, or a designate of 
his administration, is acknowledged by our Government as President of 
Costa Rica. Therefore, our State Department considers once more the anti- 
American. pro-German group of Gonzalez, Kiimpel, Petters, Dieguez, etc., 
described in this booklet by its acts, as the Government of that victimized 
country. 

The mysteries of our Latin American policies in recent years are 
indeed unsoundable. 

Complications are bound to arise under these circumstances. President 
Wilson recognizes no act under the Tinoco Constitution or the Tinoco 
regime. This nullifies the present Costa Rican Congress and Courts and 
all acts performed by them in the last two and a half years. It also licenses 
the Gonzalez group to resume its anti-American activities by impeding the 
development of those American interests to which it has been antagonistic. 
It leaves the road open to numerous diplomatic claims, and American inter- 
ests are liable to be confronted with a serious situation. Their ulitmate 
recourse against Gonzalez is Washington and Washington apparently favors 
Gonzalez. 

How about the rights of citizens of the twenty-two countries which 
recognized Tinoco and had diplomatic relations with him? 

How about the rights granted by Tinoco to strong British interests 
which have invested large amounts of money? Will Great Britain stand for 
her subjects being thus victimized? Our Government cannot possibly intend 
to recognize the validity o'f rights granted to citizens of Great Britain and 
other large states and sacrifice rights granted to citizens of the United 



99 

States and small countries? Or will the policy be one of arbitrary discrim- 
ination, recognizing such acts of the Tinoco regime as suit the whim of our 
Administration and relegate all others to the scrap heap? 

Let us analyze one case in point, which is best illustrated by extracts 
from the writer's letter of June 14, 1918, to the Hon. Stewart Johnson, 
American Charge d'Affaires in Costa Rica. 

" Fourth Attempt of the Pearsons in Costa Rica. 

" On May 6, 1918, Mr. Federico Tinoco, exercising the functions 
of President of Costa Rica, signed a contract with John M. Amory 
& Son of New York for the exclusive oil control of the four remain- 
ing provinces. . . . 

" There is, therefore, hardly any doubt that again John M. 
Amory & Son are acting merely as agents for British inter- 
ests. . . . 

" Besides, the Amory contract calls for deposits of pounds 
sterling in an English bank, and no mention is made of anything 
connected with the United States, such as formation of company, 
etc. . . . 

" It is worthy of note that the Amory contract calls, not only 
for the control of the sub-soil, that is to say, oil exploitation, but 
that it covers large sections of the surface of the four provinces as 
well, in such a manner that the Government of Co'sta Rica obligates 
itself not to grant in the future any surface rights in the said 
provinces which Amory & Son may desire. 

" Besides the contract covers practically all of the coal resources 
of the four provinces mentioned. 

" The term is for fifty years, renewable for another fifty 
years. . 

" The Alajuela Province included in the contract adjoins more 
than half of the San Juan River, which constitutes the proposed 
Nicaragua Canal route. 

" The contract mentioned grants to Amory & Son, among other 
things, the unlimited and uncontrolled right to build canals, wharves, 
lighthouses, etc., as well as the unlimited and uncontrolled right of 
navigation of rivers and other waters. 

" In other words, the co-riparian rights which Costa Rica 
undoubtedly has to the San Juan River are granted to Amory & 
Son, in part. 

" Summary. 

" S. Pearson & Son acted in 1913 in Colombia through Saturnine 
Restrepo. of London. S. Pearson & Son acted in 1913 in Costa Rica 



100 

through Wencislao de la Guardia, brother-in-law of Mr. Federico 
Tinoco, now exercising the functions of President of Costa Rica. 
Saturnino Restrepo is the main element back of the Amory & Son 
contract. Dr. Eduardo Uribe, representing and championing Amory 
& Son, acknowledges that he acts for Saturnino Restrepo, his first 
ccmsin and friend. The new Amory contract covers important rights 
to the proposed Nicaragua Canal route, as well as the absolute control 
for fifty years, renewable, of the coal and oil resources of one-third 
of Costa Rica, and especially the probable oil zones adjacent to the 
proposed Nicaragua Canal. 

" Conclusion. 

" The Amory contract is now before Congress. The Congres- 
sional Committee of Public Works, in spite of being informed of 
the strategic features that the contract contains, has unanimously 
recommended its approval. The Chamber of Deputies, in its session 
of June 13, 1918, has approved the report. The contract will prob- 
ably come up for second reading to-day, June 14th ; for third and 
final reading probably next Tuesday, June 18th, and for detailed 
discussion next Wednesday, June 19th. 

" I have no personal interest in favor of or against the contract. 
I understand that the Sinclair Central American Oil Corporation 
has no interest in favor of or against it, because it does not conflict 
with its contract. 

" I am submitting these facts, merely because I deem it my duty 
to do so at this particular moment. I do not know whether the 
United States Government has changed its policy since 1913 and 
whether there is any desire to prevent Great Britain from securing 
strategic advantages in these sections. One fact appears certain to 
me, however : that John M. Amory & Son are acting for British 
interests." 

On June 24th, 1918, the author wrote to the Honorable Stewart 
Johnson: 

" Enclo'sed herewith please find the following : 

"Two sets of photographs of letter from Saturnino Restrepo, 
London, England (associate of S. Pearson & Son, of London), to 
Dr. Eduardo Uribe (cousin of the former and representative of John 
M. Amory & Son). 

" Three plain copies of the same. 

" Three English translations of the same. 

" The original of the document is in my hands. 

" It proves the following facts in the most lucid and conclusive 
manner : 



101 

" John M. Amory & Son is not the principal in the matter 
of the petroleum matter between it and the Tinoco Government 
(see a red mark on photograph '1'). 

" John M. Amory & Son is merely acting as agent for and under 
direct instructions from strong British interests with headquarters 
in London (red mark '1'). 

" Saturnino Restrepo has been for years associated with S. 
Pearson & Son, and introduced its business in Colombia in 1913. 

" S. Pearson & Son tried various times since 1913, first in its 
O'wn name and, upon being opposed by the United States Government, 
through agents, to secure vast Costa Rican oil territories. Hence 
the British interests referred to must be S. Pearson & Son. 

"The Amory petroleum contract was worked out in London, 
mainly under the direction of Saturnino Restrepo, and sent in a 
definitely approved farm to John M. Amory & Son, referred to 
as the 'American Agents ' of the British interests mentioned (see red 
mark '2'). 

" The British principals found it expedient to display cash money 
in Costa Rica, so as to make 'interested parties feel it' (see red 
mark ' 3' ) . 

" Provision seems to have been made to pay seventy-five thou- 
sand pounds sterling for obtaining the concession. Twenty thousand 
pounds were to have been spent for exploration work during the 
first two years ; five thousand pounds to be paid to the Government 
as a guarantee fund ; but, ' after such expenditures of twenty thou- 
sand and five thousand pounds, a total of one hundred thousand 
pounds will have been invested by the firm' (see red mark '4'). 
The difference of seventy-five thousand pounds must evidently be 
destined to be the price to be paid for the concession. 

" Dr. Uribe apparently asked that a part of the said amount be 
advanced. But the British firm is opposed thereto, preferring to 
pay the total amount after securing the concession (see red mark 
'5'). 

" Saturnino Restrepo states that he has handled the whole matter 
from the beginning, evidently referring to the Pearson endeavors in 
Costa Rica since 1913 (see red mark ' 6 '). 

"British interests are also endeavoring to secure the oil lands 
of Nicaragua (see red mark '7'). 

"The Amory petroleum concession (Pearson concession) has 
been approved in three readings by the Chamber of Deputies. There 
was almost no discussion, the majority of the Congressmen favoring 
the approval of the said contract without amendments. 

" The concession is now in detailed discussion, article by article. 



102 

" If Mr. Federico Tinoco, acting as Executive of Costa Rica, 
could be induced to use his unquestioned influence upon a majority 
of the Deputies and Senators, he could avail himself of Article 87, 
Clause 5, of the new Costa Rican Constitution, by having the contract 
submitted to the Senate and there defeated. 

" Or else, a clause could be introduced prohibiting John M. 
Amory & Son from selling, transferring or leasing the concession 
or granting the usufruct thereof, directly or indirectly, to any but 
American interests." 

Our Legation finally received a cable from the State Department, 
re-affirming its policy that none but strictly American interests should be 
permitted to secure oil and other strategic rights adjacent to the inter-oceanic 
canal routes. Our Charge d'AfTaires thereupon communicated with the 
Costa Rican Government, through Joaquin Tinoco the Vice-President and 
Minister of War, in an attempt to prevent the approval of the grant to the 
British. But it was too late, as Congress had already ratified the concession. 

British interests undoubtedly considered their Tinoco grant as 
valid and have invested large sums of money in the development of the 
proposition. The following cable from London, of September 21, 1918, 
illustrates that point : 

" Liform the Government that the financial papers of London 
announce today that the refunded bonds of Costa Rica rose one 
point as a consequence of the notice circulated with respect to the 
petroleum concession granted." 

The Monroe Doctrine evidently did not deter British interests from 
securing strategic rights in the important Nicaragua Canal zone ; nor did 
President Wilson's non-recognition of the Tionco regime. However, 
American citicois were prevented from dealing zvith Tinoco, under the 
threat of the State Department, in its announcement of February, 1917, 
published in this expose, that our Government zvould neither sanction nor 
protect dealings of American citizens with the Tinoco Government. 

Will President Wilson now insist that the British oil concession is void 
for being an act of Tinoco? Will the British Government consent to her 
subjects losing these valuable strategic grants and the money invested 
therein? Or iinll the rights of Europeans and other Nationals he recognized 
for the sake of good feeling to the detriment of American investors, who 
were deterred from competition and expansion by the State Department 
threat? 



103 



CONCLUSION. 

A More Practical Latin American Policy Is Needed, Protecting Our 
Citizens and, at the Same Time, Aiding Our Continental 

Neighbors. 

The case just related covers a period directly following President 
Wilson's Mobile speech of 1913 wherein, by arguing against the granting 
by Latin American governments of special concessions, he announced a 
departure from the established Repul)lican policy and enunciated a new 
doctrine tending to the establishment of ties with Latin America, not based 
upon common interest but upon common understanding. President Gonzalez 
has stated more than once that, in blocking the American oil and other 
interests, he was acting in accordance with the new Wilson policy which 
he considered gave him license to deliver into European hands concessions 
which did not fit into the Wilson classification of enterprises deserving the 
good-will of the Stars and Stripes. This feature is, in itself, a practical 
proof that our President's idealistic aims have been peculiarly and con- 
veniently interpreted by some of the smaller Latin leaders. 

Practically all large investments in the little Republics to the south of 
us require such special grants as Mr. Wilson is opposed to, as the only 
possible safeguard against prohibitive legislation. It is obvious, therefore, 
that our southward industrial expansion will seriously sufifer, unless our 
Government makes it clear in words, more direct and concise than diplo- 
matic and idealistic, that the Stars and Stripes follows citizens to distant 
shores as closely as the Union Jack. 

If it is to the interest of our country that American business expand 
into the Latin American nations; that the prestige of American citizens 
devoting their energies to that purpose be upheld ; that legitimate American 
enterprises be given sufficient protection to save them from undue inter- 
ference — then it should be made known categorically that an American 
venturing out of his country upon legitimate industrial or commercial pursuit 
is not an outcast ; that the United States Government will not stand for his 
being harassed and persecuted ; that the spirit of Roosevelt is not dead. 

We with our Executive all long for a gradual betterment of the world, 
for a final Utopian reign of mutual helj) and understanding above self- 
interest. The present world turmoil shows too clearly, alas, that mortals 
will still be mortals. Perfection cannot be improvised, nor can it be imposed 
~upon the world. It can only come through centuries of slow evolution. Any 
attempt to suddenly squeeze humanity into a tight coat of goodness will 
only stimulate the desire for an easier and more comfortable garment. 



104 

Latin Americans are sensitive. The smaller the country, the greater its 
national pride and fear of the powerful neighbor. They do not want to 
be told what to do and what not to do. They justly resent interference 
in their internal affairs. With what right do we treat them as irresponsible 
minors subject to our guardianship? With what right do we insist upon 
one man being placed in the presidency rather than another ; which consti- 
tution to be adopted ; how they shall spend their money . . . ? 

Let us help them, by all means ! But let us help them as adults, not as 
children. Let us not feed them wonderfully phrased promises and general- 
ities, whilst their commerce and industries are stagnant for want of capital. 
Their countries contain untold riches the surface of which has hardly been 
scratched. There is timber aplenty, at a time when Europe is in sore need 
of it. There are immense iron deposits, untouched because no roads lead 
to them. There are millions of acres of wheat, sugar, rice lands which lie 
waste for want of borrowing and transportation facilities. Let us be prac- 
tical and, instead of words, feed them dollars — such dollars to be spent 
under the direction of a mixed commission controlled by Americans and 
to be devoted solely to the opening up and development of the smaller 
republics. 

Let our Government give every facility, and use its good offices so 
that the southern republics give facilities in return, for inducing American 
capitalists to fearlessly venture into their sphere. But let us make it plain 
that such ties of common interest are based upon the common understanding 
that intrigues as the one exposed in this booklet will not be tolerated. 



105 



APPENDIX I. 

On February 25, 1919, the Hon. Norman J. Gould presented a resolution 
in the House of Representatives, as follows : 

(See Congressional Record of February 27, 1919.) 

Mr. Gould — Mr. Speaker, I have today introduced a resolution 
directing the House Committee on Foreign Affairs to investigate the 
present situation in Costa Rica and the Government's connection there- 
with. 

I have taken this step because of information which recently 
has come to me and which, if truthful, indicates the existence of a 
situation in that Republic and of a diplomatic policy on the part of 
this Government which is so repugnant to our traditions and previous 
policies as to call for prompt explanation on the part of the Depart- 
ment of State and full and free discussion in Congress. 

Personally I can not vouch for all of the facts, or alleged facts, 
that have been brought to my attention ; and, due to the unfortunate 
policy of the State Department, as a result of which Americans seem 
to forfeit their rights to the protection of their Government when 
they venture into Latin American countries in the pursuit of foreign 
trade and commerce. I do not now feel at liberty to give the House 
the names of my various informants. This much, however, I will 
state on the strength of my own observation : 

" The political plague born in the State Department, reared in 
its recently acquired atmosphere of paternal idealism and pride-stifling 
internationalism, which has wrecked peaceful, prosperous Mexico in 
the last eight years, now seems to threaten not only Costa Rica but 
all of Central America." 

Articles in both Washington and New York newspapers recently 
exposed a very serious condition of unrest extending virtually from 
the Rio Grande to the Panama Canal. It would appear that this con- 
dition is merely the natural and inevitable result of a policy toward 
Costa Rica strikingly similar to the policy which has, in my belief, 
been so terribly exemplified in the case of Mexico. 

For more than eighteen months President Tinoco, of Costa Rica, 
has been refused recognition by this Government. The reasons which 
prompted the refusal are not now known and never have been known 
to the public. The results, however, are clear enough. Costa Rica's 
credit has been injured; her Government has been discredited, and 
her very institutions threatened with the same kind of attacks that 



106 

Mexico has endured during the last eight years. During the fall of 
1918 a number of American newspapers published a series of sensa- 
tional articles which purported to be a revelation of President Wil- 
son's motives in refusing diplomatic relations with Costa Rica. These 
publications, at that time, claimed that a group of American citizens 
led by Mr. Lincoln G. Valentine of New York, inspired and financed 
the overthrow of the Gonzalez Government and placed Tinoco in the 
presidency, in order to secure from the new Government certain oil 
concessions. 

Subsequent to this publication, I am reliably informed, a sub- 
committee of the Foreign Relations Committee of the Senate inquired 
into the refusal of this Government to accord recognition to the ex- 
isting government of Costa Rica, headed by President Tinoco. That 
sub-committee, of course, had before it not only such information 
and such allegations as the newspapers had published, but additional 
facts, obtained, I presume, from the State Department and other 
sources. 

With this information before it, Mr. Speaker, the sub-committee 
reported, in effect, that it could find no good and sufficient reason 
for the continued refusal to recognize the Government headed by 
President Tinoco. In view of international conditions then existing, 
however, the sub-committee did not recommend mandatory action on 
the part of the Senate, although, I am informed, several members 
of the sub-committee unofficially communicated these facts to the 
State Department and urged President Tinoco's recognition. 

Gonzalez, the deposed President of Costa Rica, immediately 
after the bloodless coup d'etat two years ago, had left Costa Rica 
and had come to the United States. Since that time, I am informed, 
he and his friends have persistently maintained an intrigue of pub- 
licity against President Tinoco and against z^merican interests in 
Costa Rica. If statements I have received are true, this intrigue 
has reached into some of the executive departments of this Govern- 
ment. 

I wish to lay before the House at this time some of these allega- 
tions, which have come to me unsolicited and wdiich I feel strongly 
should be investigated by the Foreign Affairs Committee. They 
include these : 

1. That the newspaper articles published last fall included what 
was alleged to be confidential correspondence between Mr. Lincoln G. 
Valentine and other American citizens. 

2. That, according to these publications, this confidential cor- 
respondence — involving American citizens of integrity and good 
standing — was obtained from the safes of the parties named through 



107 

the assistance of — I quote the pubhcations — " O'fficials of the 
United States Government." 

3. That this assistance was alleged to have come through a man 
who purported to be an agent of the Department of Justice. 

4. That this alleged agent of the Department of Justice de- 
livered these pilfered papers to Gonzalez to be used in the further- 
ance of the latter's publicity intrigues against American citizens 
and their interests in Costa Rica. 

5. That one of the first acts of Gonzalez after assuming the 
Presidency of Costa Rica in 191^1 — shortly after the outbreak of the 
European war — was to be found, in collaboration with a notorious 
German propagandist, a newspaper devoted to pro-German pub- 
licity. 

Mr. Speaker — I am loath to believe these allegations ; I am loath 
to believe that the— shall I say " foreign office " of the United States 
Government? — is engaged in safe-cracking work against its own citi- 
zens in behalf of foreign political exiles or that it is conniving at 
a publicity intrigue which may have for its object the wrecking of 
an important phase of our foreign commerce. 

And I am loath to permit such statements and allegations to go 
unchallenged by this Congress. 

But, Mr. Speaker, I am more loath to accept the responsibility 
as a Member of the American Congress for the continuation without 
my protest of such practices if they do exist. 

I want this House and this Congress to have the facts. I want 
to see the unpublished portions of that stolen correspondence. I 
want to know if, as has been alleged, Gonzalez, during his tenure as 
President of Costa Rica, persistently and systematically persecuted 
foreign interests that had invested in Costa Rican properties on his 
solicitation. I want to know if, as has been alleged, this Gonzalez 
in his persecution of American interests, advised with and was advised 
by that same German propaganda service of whose insidious and dia- 
bolical workings in Mexico we learned through the publication of 
the Zimmerman note two years ago. I want to^ know if, in Costa 
Rica as in Mexico, such anti-American political leaders have been 
used as the cat's-paws of the pirates of Wilhelmstrasse. 

It took the American people a good many years to realize, Mr. 
Speaker, that crimes were being committed in Mexico under the guise 
of " revolution " ; it took them a good many years to realize that the 
German Government had reached into the very vitals of that country' 
with its baneful influences, and when the story was told officially 
through the publication of the Zimmerman correspondence this coun- 
try stood aghast. 



108 

I believe the time has come to show the hidden hand of intrigue 
among our Latin American neighbors and to serve notice on all 
agents of Germany that this Government will no longer allow them 
to hound Americans, even though their activities are shrouded in the 
mystery of Latin American policies. 

Mr. Speaker, I believe the time has come again, and I thank 
God for it, when Members of the American Congress may ask ques- 
tions of the State Department without inviting reflections upon their 
loyalty, public spirit, or patriotism. 



109 



APPENDIX II. 

From the Testimony of the Assistant Editor of " El Imparcial/' 
German Propaganda Paper Founded by Gonzalez and His Hun 
Coterie. 

" When in May, 1916, some friction arose between the Mexican Gov- 
ernment and that of the United States, Alfredo Gonzalez telephoned from 
the Presidential House ordering the editor o'f the daily " El Imparcial " to 
back directly the attitude of Carranza by offering its columns to Mr. Manero 
(commission agent of that Government) for any publications that he might 
wish to make in favor of Mexico. These were made in almost every 
edition. 

" There was sent from the Presidential House to the editing rooms of 
the paper, in a closed envelope, an editorial article containing the following 
paragraphs : 

" ' The note o'f Venustiano Carranza to the Government of the 
United States is one of the highest examples of national dignity. 
This is the moment for Mexico to sever the American power at its 
root, as the Yankee eagle is flying from one Latin Republic to the 
other just as in o'lden times the Napoleonic eagles were flying from 
tower to tower. 

" '* * * that it is proven that President Wilson, who is call- 
ing himself democratic and the protector of the Latin American 
countries personifies today the harshness, the arrogance, the fatuity 
and the impudence of vulgar Yankees.' " 



M. B. Brown Printing & Binding Co., 
New York. 



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